I was stupid and naive about the market, dont do this. Now I have a problem and need help [Russia]

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investor353
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Joined: Mon Jul 12, 2021 5:03 pm

I was stupid and naive about the market, dont do this. Now I have a problem and need help [Russia]

Post by investor353 »

Hello everybody! I am 31. (I am not a US resident btw,sorry for my english . homecountry Russia. )
I started to invest about 3 years ago.
I did not have any experience and paid for portfolio plan. which contain 60% individual stocks (US only), and only 40% VOO.. =(

60%: it is 10 big US commpany per 6% each (was back then,now it looks different , because I did not do any rebalancing)
40%: VOO

it is about 170k total.

companies:
APPL- 6
ACN - 8.3
BA - 7.2
HD - 4.6
MCD - 7.5
MSFT - 10.6
ROST - 5.5
UNH - 4.8
V - 5.4
---
VOO - 36.9
VXUS - 2.8

Now I know three things:
1. dont try to bit the market
2. etf is good
3. diversification around the glob - must have.
-------------------------------------------------------------

I want to invest more now - about 100k

So I have three choices now:
1. Sell all stuff. Buy VT. And pay tax about 9-13K - pain in the ass =(
2. Dont touch the individual stocks, next time buy VXUS and VOO only.
3. Sell only individual stocks - put income into VOO and VXUS. Pay tax about 5-7k =(. next time buy VXUS and VOO only

which choice is more rational, how do you think?
in which proportion +100k? At once? or 10-20k per month. (or it is stupid at all to invest when the market so high despite covid)
how much vxus if so: 35% is ok?

please don't pass by, especially if you have experience
Thank you
Last edited by investor353 on Mon Jul 12, 2021 6:42 pm, edited 1 time in total.
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LadyGeek
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Re: I was stupid and naive about the market, dont do this.Now I have a problem and need help

Post by LadyGeek »

Welcome! We have experience and will help you.

Are you a US resident (living in the US)? If you are living outside the US, what is your home country?

This information is important because taxation and regulations are different for every country.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
Topic Author
investor353
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Joined: Mon Jul 12, 2021 5:03 pm

Re: I was stupid and naive about the market, dont do this.Now I have a problem and need help

Post by investor353 »

Hi LadyGeek. No, I am not a US resident, my homecountry is Russia. So my tax about 13-14% from the income.
Thank you
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LadyGeek
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Re: I was stupid and naive about the market, dont do this.Now I have a problem and need help [Russia]

Post by LadyGeek »

Hello,

Thank you for the information. I have moved your thread (this discussion) to the Non-US Investing forum. This forum has the experience to answer questions from members who live outside the US.

I have also modified the title of this thread to include Russia.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
dboeger1
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Re: I was stupid and naive about the market, dont do this. Now I have a problem and need help [Russia]

Post by dboeger1 »

Personally, I would go more along the lines of option 3 in your list. I am not particularly comfortable holding concentrated positions of individual companies. Remember, some of those stocks are already pretty heavily represented in VOO, so your stake in something like AAPL is quite high. It looks like you may have gotten lucky with your timing (although I didn't check thoroughly), so better to just sell now, collect your profits, and be happy it didn't cost you.

I personally buy 100% VTWAX (essentially the mutual fund equivalent of VT), but VTI+VXUS is technically better for reasons related to costs, tax lost harvesting, ability to tilt, nuances of taxation in taxable, etc. (not sure how relevant these issues are in Russia). I would keep the VOO but buy VTI in the future instead just because I prefer the total market, but VOO is certainly a quality investment and a good approximation of the total market. If you kept buying VOO+VXUS, that would be perfectly fine.

As for DCA and ex-US percentage, I'll let others chime in, as I've given my 2 cents. I prefer lump sum and global cap weighting, but there are perfectly legitimate reasons to make other choices as well which don't apply to me.
Topic Author
investor353
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Joined: Mon Jul 12, 2021 5:03 pm

Re: I was stupid and naive about the market, dont do this. Now I have a problem and need help [Russia]

Post by investor353 »

Thank you dboeger1!
Yes in this case you are right, about APPL it was just lucky timing. I bought it before the stocks jumped high. In fact it helped to beat the s&p, not too much 1-3% as I remember.

True, VOO has about 5.5% APPL and 5.3% MSFT, so in total: the APPL stack is about 13k, and MSFT about 21k.

Btw, just to buy VT, and don't touch VOO sounds interesting to me because it is more passive I would say, because voo+vxus will need some rebalancing anyway, but on the other side you can choose more precisely how much xus market you need.

dboeger1, how do you think it is better to invest all cache at once, or split it weekly/monthly for example?

thanks
hi_there
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Re: I was stupid and naive about the market, dont do this. Now I have a problem and need help [Russia]

Post by hi_there »

I would just sell portions of the single stocks that are over weight based on market cap, or if you have a loss that can offset gains elsewhere. I don't think it's worth paying tax to unwind all your single stock positions, since they are relatively diverse.
TedSwippet
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Re: I was stupid and naive about the market, dont do this. Now I have a problem and need help [Russia]

Post by TedSwippet »

Welcome.
investor353 wrote: Mon Jul 12, 2021 6:11 pm I did not have any experience and paid for portfolio plan. which contain 60% individual stocks (US only), and only 40% VOO.. =(

60%: it is 10 big US commpany per 6% each (was back then,now it looks different , because I did not do any rebalancing)
40%: VOO

it is about 170k total.
...
I want to invest more now - about 100k
Before going any further, take some time to understand your US tax exposure here.

Russia has a good income tax treaty with the US (a 10% US tax rate on dividends paid by US stocks and US domiciled ETFs), but it has no US estate tax treaty. This means that you are at risk of losing 26-40% of your holdings above just $60k to US estate tax -- that is, the potential for US estate tax of around $45k on your proposed $270k portfolio.

Full details and suggestions for non-US domiciled equivalent ETFs in these wiki pages:
Last edited by TedSwippet on Tue Jul 13, 2021 4:26 am, edited 1 time in total.
chris319
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Joined: Thu Jan 28, 2021 5:04 pm

Re: I was stupid and naive about the market, dont do this. Now I have a problem and need help [Russia]

Post by chris319 »

I have researched the stocks in your portfolio.

I would not sell any stocks which would result in a taxable gain for you. Paying tax is throwing money away. Hold onto the stocks that are profitable for you. I have reservations about BA because it has earnings per share (EPS) of -20.55. I don't like to see a negative EPS. However, don't sell it if it would result in a realized (taxable) gain for you. The rest are good companies and you already own them, so hold onto them. Again, don't sell any of your profitable stock positions. I own some ROST and it has done well since I've held it.

Any future investments should be in VOO and VXUS. This is a modification of your option #2.

Best of luck! :moneybag
Financial decisions based on emotion often turn out to be bad decisions.
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