Does it make sense to own the same mutual fund in two accounts? One's an IRA and the other is a taxable accoun

Question

PSPFX - what you think? risky to hold the same fund in two accounts?

Answer 1

There are lots of mutual funds out there from which to choose, so if you can, it's a good idea to own more than one.

There is also a tax reason why not to hold the same security in an IRA as in a taxable account. If you end up taking a loss on the fund in the taxable account within 30 days of buying it in the IRA, you will not be able to deduct the loss. Some are confused about this point, and I invite them to read carefully the IRS publication about capital gains.

Answer 2

You ask a very interesting question. I would like to re-phrase the question just a little. Does it make sense to place all of your money into one mutual fund or one security?

The answer to that question is no. There would be too much risk in doing so. A well diversified portfolio reduces your overall risk.

Now to answer this particular question that you asked. If this mutual fund is part of a larger holding of stocks and funds, the answer is perhaps. Is your IRA a Ross IRA or a tradional IRA. It makes a difference in the assets you might wish to place in the IRA. If it is a Ross IRA then the account is tax free. If a traditional it is only tax deferred. It would make sense to place PSPFX into a Ross IRA, less sense into a traditional IRA.

Why do I say that? Because a traditional IRA is taxed at the full tax rate regardless of the class of assets in the account. If PSPFX increases in value, which I am sure that you expect, the increase in a traditional IRA will be taxed at the full tax rate. Outside of a traditional IRA the increase will be taxed at the long term captial gains rate, which is about 1/2 the full rate. From a tax standpoint the types of assets to put into a tradtional IRA are assets that would be taxed at the full rate anyway--bonds, cds, etc.

Answer 3

The more diversified your overall portfolio, the less risky it is to have the same fund in two accounts. For example, I own two Fidelity index funds: one that represents the whole US stock market, and another that represents a large share of the international market. I have them both in my IRA, my wife's retirement account, and our taxable account. I'm not worried, because the whole worldwide market has to crash for me to lose a lot of money.

However, some mutual funds are narrowly targeted toward specific industries or market segments. Those are fine for a small portion of your portfolio (in either type of account), but you should never risk a substantial part of your nest egg in narrow funds.

In short, just make sure your accounts are well diversified and you'll minimize your risk.

Answer 4

if fund itself is risky - yes a problem.This 1 not. GCS the close end resources 1 a smarter move as selss at a discount to NAV. No inherent reason not to hold same fund in both if were a S&P 500 index fund or the like. Need to diversify but same fund can be a part of retirement & current investing strategies.

Answer 5

Try contacting Primerica Financial Services. Their services are free and they will give you a complimentary Financial Needs Analysis. This will give you information that is specific to your situation in life and based on what you want to achieve (ie, debt-freedom, children's education, financial independence, etc). They are listed in the phone book and also have a website. Good luck

Answer 6

perhaps you can get answer at this;

http://www.bernanke.cn/what-is-a-mutual-fund.html

good Luck!