Portfolio Help with a messy portfolio

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Topic Author
AgeBee
Posts: 10
Joined: Sat Aug 06, 2022 4:32 pm

Portfolio Help with a messy portfolio

Post by AgeBee »

I've been lurking quite a bit and I finally sat down and pulled it all together. If I need to adjust something please let me know. Really need your help in getting a handle on this madness:

Emergency funds: Yes

Debt: Mortgage Only: -$531,608 | Rate: 2.375% | 15 Year

Tax Filing Status: Married Filing Jointly

Tax Rate: 37% Federal, 10% State

State of Residence: CA

Age: Me: 49 | She: 51

Desired Asset allocation: 70% stocks / 30% bonds
Desired International allocation: 10% (Open for suggestions)

Total Portfolio: $4,036,807
Note: Total percentage of all the above accounts together equals 100%. (I'm quite proud of myself for this accomplishment :-) )

Current retirement assets

Taxable
0.29% CASH $11,750.25

Taxable Funds
0.38% VCR Vanguard Consumer Discretion ETF (0.10%)
0.26% VEIPX VANGUARD EQTY INCOME INVESTOR (0.28%)
0.16% VEMAX VANGUARD EMRG MKTS STOCK INDEX ADMIRAL (0.14%)
1.22% VEXAX VANGUARD EXTENDED MKT INDEX ADMIRAL (0.06%)
5.44% VFIAX VANGUARD 500 INDEX ADMIRAL (0.04%)
0.27% VFICX VANGUARD INTMD TERM INVMT GRADE INV (0.20%)
0.39% VGSLX VANGUARD REAL ESTATE INDEX ADMIRAL (0.12%)
0.58% VIMAX VANGUARD MID CAP INDEX ADMIRAL (0.05%)
0.74% VSIAX VANGUARD SM CAP VALUE INDEX ADMIRAL (0.07%)
0.46% VTRIX VANGUARD INTL VALUE INVESTOR (0.36%)
1.19% VTSAX VANGUARD TOTAL STOCK MKT INDEX ADMIRAL (0.04%)
0.26% VWITX VANGUARD INTMD TERM TAX-EXEMPT INVESTOR (0.17%)

Taxable Stocks
3.33% AAPL Apple Inc. - Common Stock
0.12% ABT Abbott Laboratories Common Stock
0.98% AMZN Amazon.com, Inc. - Common Stock
0.10% BMY Bristol-Myers Squibb Company Common Stock
0.46% COP ConocoPhillips Common Stock
0.25% CORT Corcept Therapeutics Incorporated - Common Stock
0.08% CSIQ Canadian Solar Inc. - Common Shares
0.28% DVN Devon Energy Corporation Common Stock
0.10% EVR Evercore Inc. Class A Common Stock
0.25% FSLR First Solar, Inc. - Common Stock
0.17% FXAIX FIDELITY INVESTMENTS 500 INDEX RETAIL
0.20% GNRC Generac Holdlings Inc. Common Stock
0.59% GOOG Alphabet Inc. - Class C Capital Stock
0.10% ILMN Illumina, Inc. - Common Stock
0.23% META Meta Platforms, Inc. - Class A Common Stock
0.09% SLB Schlumberger N.V. Common Stock
0.53% SQM Sociedad Quimica y Minera S.A. Common Stock
0.21% TRMB Trimble Inc. - Common Stock
0.08% WIT Wipro Limited Common Stock
1.44% TTD THE TRADE DESK INC COM CL A
0.92% MSFT MICROSOFT CORP COM
0.60% FTNT FORTINET INC COM
0.32% JKHY HENRY JACK & ASSOC INC COM
0.51% SHOP SHOPIFY INC CL A. <--- :oops: I blame Fool.com for not selling last year
0.27% APPN APPIAN CORP CL A
0.03% ATVI ACTIVISION BLIZZARD INC COM
0.01% HAS HASBRO INC COM
0.26% MMM 3M CO COM
0.12% GE GENERAL ELECTRIC CO COM NEW
0.40% UBER UBER TECHNOLOGIES INC COM
0.10% BILI BILIBILI INC SPONS ADS REP Z

His 401k
0.36% Target Retirement 2040 Trust Plus (0.06%)
9.39% Self-Directed Brokerage Fund. <--- :confused Needs to be invested

His ESPP at eTrade
2.96% Techcompany (Anonymized after I received feedback)

His RSUs at eTrade
16.42% Techcompany <--- :shock: To much is in my company stocks Not sure how much to take out


His Rollover IRA at etrade
1.51% NVDA NVIDIA CORPORATION COM
0.23% BABA ALIBABA GROUP HLDG LTD SPONSORED ADS
0.27% ADSK AUTODESK INC COM
0.63% VFIAX VANGUARD 500 INDEX ADMIRAL (0.04%)
1.72% VFORX VANGUARD TARGET RETIREMENT 2040 FUND (0.08%)
0.71% CASH

His ROTH IRA at eTrade
1.40% AMZN AMAZON COM INC COM
0.49% AAPL APPLE INC COM
0.21% SBUX STARBUCKS CORP COM
0.33% CRM SALESFORCE INC COM
0.11% ZM ZOOM VIDEO COMMUNICATIONS INC CL A
0.17% CORT CORCEPT THERAPEUTICS INC COM
0.09% PYPL PAYPAL HLDGS INC COM
0.13% ICLR ICON PLC SHS
0.00% GIGM GIGAMEDIA LTD SHS NEW
0.06% QNST QUINSTREET INC COM
0.19% TKR TIMKEN CO COM
0.17% ILMN ILLUMINA INC COM
0.18% EVR EVERCORE INC CLASS A
0.05% GRVY GRAVITY CO LTD SPONSORED ADS NE
0.05% UPST UPSTART HLDGS INC COM
0.11% CASH


His Health Spending Account
0.85% VFIFX VANGUARD TARGET RETIREMENT 2050 FUND (0.08%)


Her 401(k)
3.39% T Rowe Price Retirement 2035 Tr D (0.32)

Her RIRA
Stocks
0.18% BMY Bristol-Myers Squibb Company Common Stock
0.10% DVN Devon Energy Corporation Common Stock
0.20% EVR Evercore Inc. Class A Common Stock
0.88% GOOG Alphabet Inc. - Class C Capital Stock
0.08% GRVY GRAVITY Co., Ltd. - American depositary shares, each representing one common share

Funds
0.15% AIA iShares Asia 50 ETF (ER n/a)
0.34% IWN iShares Russell 2000 Value ETF (ER n/a)
0.21% MXI iShares Global Materials ETF (ER n/a)
0.17% TQQQ ProShares UltraPro QQQ (ER n/a)
1.08% FXAIX FIDELITY INVESTMENTS 500 INDEX RETAIL (0.02%)
0.06% CASH

Her Rollover IRA
17.54% VTTHX VANGUARD TARGET RET 2035 FD INVESTOR CL (0.08%). <--- Large allocation
7.98% FXAIX FIDELITY 500 INDEX FUND (0.02%)
2.93% FSMAX FIDELITY EXTENDED MARKET INDEX FUND (0.04%)
1.00% 949763UT1 WELLS FARGO BANK NATL ASSN CD 3.45000% 10/26/2023
0.03% CORE** FDIC-INSURED DEPOSIT SWEEP

Her HSA
0.48% FPURX FIDELITY PURITAN (0.51%)


_______________________________________________________________
Accounts for the 17 year old son (Not included in overall Calculation - just added for completeness)
529 Plan Fixed Account: $160,610.29 <--- Moved this into a fixed income account. Correct move?!

Custodial Account:
VOO $1911
VIG $1717
IWM $771
IXUS $1141
CASH $1508
TOTAL $7050
_______________________________________________________________

Contributions

New annual Contributions
$23,698 his 401k - 10%. Adobe's match is 3%
$27,000 her 401k - 6%. Up to $55k total including 401(k) and profit sharing.

Besides our 401(k) we are not putting any more money aside. We do pay our mortgage and get bonuses, ESPP and RSU money each year.


Available funds

Funds available in his 401(k)
International Stock Funds
Dodge & Cox International Stock Fund Class I DODFX (0.62%)
Vanguard FTSE All-World ex-US Index Fund Institutional Plus Shares VFWPX (0.06%)
Domestic Stock Funds
DFA U.S. Small Cap Value Portfolio Institutional Class DFSVX (0.3%)
Vanguard Explorer Fund Admiral Shares VEXRX (0.41%)
Vanguard Extended Market Index Fund Institutional Plus Shares VEMPX (0.04%)
Vanguard FTSE Social Index Fund Institutional Shares VFTNX (0.12%)
Vanguard Institutional 500 Index Trust —
Vanguard U.S. Growth Fund Admiral Shares VWUAX (0.11%)
Vanguard Windsor II Fund Admiral Shares VWNAX (0.26%)
Bond Funds
PIMCO Total Return Fund Institutional Class PTTRX (0.47%)
Vanguard Inflation-Protected Securities Fund Institutional Shares VIPIX (0.07%)
Vanguard Institutional Total Bond Market Index Trust —
Balanced Funds (Stocks and Bonds)
Various Target Retirement Funds

Funds available in her 403(b)
PIMCO Commodity Real Ret Strat Instl PCRIX (0.88)
Vanguard Real Estate Index Admiral VGSLX (0.12)
AB Small Cap Growth Z QUAZX (0.75)
Vanguard Small Cap Index Adm VSMAX (0.05)
Delaware Ivy Mid Cap Growth I IYMIX (0.95)
MFS Mid Cap Value R6 MVCKX (0.64)
Vanguard Mid Cap Index Fund - Admiral VIMAX (0.05)
Dodge & Cox Stock - I DODGX (0.51)
Fidelity 500 Index FXAIX (0.02)
JPMorgan US Equity R6 JUEMX (0.47)
MFS Growth R6 MFEKX (0.5)
Invesco Developing Markets R6 ODVIX (0.81)
Vanguard Total Intl Stock Index Admiral VTIAX (0.11)
Key Guaranteed Portfolio Fund N/A
Schwab SDB Securities N/A
Schwab SDB Securities Roth N/A
Schwab SDB Sweep Program N/A
Schwab SDB Sweep Program Roth N/A
Allspring Core Bond R6 WTRIX (0.45)
PGIM High-Yield R6 PHYQX (0.38)
Vanguard Interm-Term Bond Index Adm VBILX (0.07)
T Rowe Price Target Retirement Plans (0.32)

Questions:
  • How on earth do we simplify all of this into a Booglehead style set-up with just a few funds? :confused :shock: :?: :!:
  • How can we avoid some of the tax implication by shifting this all around?
  • Are there financial advisors that would help take this on?
  • I wouldn't mind managing all this alone but I think it's to complicated in the current state.
  • What would we ask a FA to do?
  • How would you tackle this mess of a portfolio?
Last edited by AgeBee on Wed Aug 10, 2022 8:13 pm, edited 1 time in total.
livesoft
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Joined: Thu Mar 01, 2007 7:00 pm

Re: Portfolio Help with a messy portfolio

Post by livesoft »

The first thing I would do is easy:
Sell all stocks and ETFs in the Roth IRAs (unless ticker is VTI) and use the money to buy VTI.
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retired@50
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Location: Living in the U.S.A.

Re: Portfolio Help with a messy portfolio

Post by retired@50 »

AgeBee wrote: Sun Aug 07, 2022 1:00 am
  • How would you tackle this mess of a portfolio?
Welcome to the forum.
Some observations...

You're in a high tax bracket, so you'll need to pay attention to (and possibly learn a bit about) income taxes if you really want to minimize the pain of cleaning up the portfolio.

The Boglehead wiki page on paying a tax cost to switch funds could be instructive.

The Boglehead wiki page on tax loss harvesting should also be considered, given the number of individual positions you hold.

The Boglehead wiki also has a page that describes tax efficient fund placement. Reading this page will help you avoid fund placement errors like holding VFICX and VGSLX in your taxable account space.

You're making the far too frequent error of having too much in your employer's stock. While you may believe in the company, and they may be around for another 1,000 years, nobody really knows that for certain. Diversify your company holdings to reduce the risk of this position. Pay taxes if necessary. Try to keep it under 5% of your portfolio.

Know that transactions inside IRA, Roth IRA, 403b, & 401k accounts can be done with no tax consequences. So, cleaning up those accounts should be a snap.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
Outer Marker
Posts: 4362
Joined: Sun Mar 08, 2009 8:01 am

Re: Portfolio Help with a messy portfolio

Post by Outer Marker »

Welcome to the forum.

Wow. That is quite a thicket. Congratulations on your decision to clean it up.

May I ask how that happened?

In addition to livesoft's suggestion, I'd start selling off all the individual stock and small fund positions in taxable you can without triggering large capital gains. Sell off all losers, and use those to balance the gains from winners.

Consolidate your taxable to the extent possible into:
Total Stock Market and/or S&P 500 (not worth selling S&P 500 and incur gains as its practically the same)
Total International

Put priority on getting rid of tax inefficient funds in taxable like REIT and Intermediate Bond. They don't belong there.

Hold all your bonds in traditional IRA or traditional 401K space.

Conventional wisdom around here tends to be around 20% international, but it's debated forever.

If you're not up to the task of doing all the weeding and gardening that's required, a boglehead type advisor like Rick Ferri could take it on for you. If you take your time and do it slowly and methodically, you could do it yourself. The journey of a thousand miles . . .
bearwithbear
Posts: 159
Joined: Thu Jun 28, 2018 5:55 pm

Re: Portfolio Help with a messy portfolio

Post by bearwithbear »

AgeBee,

It looks like your long term capital gains tax rate is 20% for Feds and 10.3% state (CA).
Are there losses on some of these positions? Take the losses and sell as much stock with gains to match.
Charitable giving can be done with appreciated securities. Does not create a taxable gain for you.

You wrote that you will only be contributing to your retirement accounts. Nothing to taxable or savings. Does this mean that your high tax bracket is not this high ever year? If so the tax rates on the long term gains would go down for CA and possible for the Feds.

Don't let judge what to do solely on the amount of tax to be paid. The process of simplifying this portfolio might take many years if minimizing taxes is a consideration. That is not necessarily bad or good.

Best,
Bear
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nedsaid
Posts: 19249
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Re: Portfolio Help with a messy portfolio

Post by nedsaid »

My question is did you do all of this yourself? If so, you actually did a good job. Just eyeballing the stocks, I can see that you had the good sense to diversify across industries. To me, the portfolio construction looks pretty good but certainly the portfolio could be simpler. Putting together a $4 million dollar portfolio is quite an accomplishment and you should congratulate yourself for that. You have received great advice here so far, I don't have much to add. Wanted to make clear what we have is something good that can be improved and not a disaster.

The four things that I would say is that individual stocks are an inefficient way to invest, learn about how investments are taxed, have at least 20% of your stocks invested Internationally, and write up an Investment Policy Statement. Also decide upon the maximum allocation to your own company stock, most here would say a maximum of 10%, but again you have to take into account taxes.
A fool and his money are good for business.
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Duckie
Posts: 9767
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Re: Portfolio Help with a messy portfolio

Post by Duckie »

AgeBee wrote: Sun Aug 07, 2022 1:00 am Funds available in his 401(k)
The best options are:
  • Vanguard Institutional 500 Index Trust -- Large caps, 80% of US stocks
  • Vanguard Extended Market Index VEMPX (0.04%) -- Mid/small caps, 20% of US stocks
  • Vanguard FTSE All-World ex-US Index VFWPX (0.06%) -- Almost complete international stocks
  • Vanguard Institutional Total Bond Market Index Trust -- US bonds
What are the plan expense ratios for the 500 Index and Total Bond funds?
Funds available in her 403(b)
The best options are:
  • Fidelity 500 Index FXAIX (0.02)
  • Vanguard Total Intl Stock Index VTIAX (0.11)
  • Vanguard Interm-Term Bond Index VBILX (0.07)
How would you tackle this mess of a portfolio?
To start I would:
  1. Turn OFF all automatic dividend reinvestment in your taxable account. Actually, to avoid a potential wash sale turn it off in the IRAs, too. Send all dividends/distributions to your settlement fund or a money market. Don't buy more of anything until you figure out exactly what you plan to keep in the taxable account.
  2. Go through every stock/bond/ETF/mutual fund in your taxable account and find out the current unrealized gain/loss. That way you'll have an idea of the tax hit if you sell everything (you won't).
  3. Sell everything with a loss in the taxable account. Even if you might want it later, sell it now. Make sure you don't purchase the same thing in a retirement account triggering a wash sale. If you want to sell something in taxable that is also in your retirement accounts, sell in the retirement account first. And by first I mean the day before.
  4. Sell some taxable assets with gains, enough so that the loss and gain balance each other out.
  5. Decide how much you are willing to pay this year in capital gains taxes and sell assets with gains up to that point.
You can clean up your retirement accounts without considering taxes but take your time doing it. I would continue to use the target-date funds in the employer plans for now to avoid potential wash sales because you can't turn off dividend reinvestment there. Eventually all your pre-tax accounts will probably be 100% bonds.
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Watty
Posts: 28813
Joined: Wed Oct 10, 2007 3:55 pm

Re: Portfolio Help with a messy portfolio

Post by Watty »

You should edit your post to take out the company name of the company you work for and just call it a tech company. You can use the icon with a pencil on it to edit your post. There is not any reason that we need to know that and it makes your post less anonymous.

The company stock is the elephant in the room so focus on that first and not some stock that is 0.1% of your portfolio. It would be good to do a dummy tax return to make sure there are not any "gotcha's" but you should really just sell that company stock off. If you will pay the same taxes to sell them now, or five years from now, there is no tax advantage to holding them longer. In addition to the stocks you own your mutual funds likely also own that stock so you have more exposure to it than you may realize.

Not promptly selling RSUs has gotten lots of people into trouble.

One thing that may not have been mentioned yet is that if you support a church or charity then you can give them shares of some of the stocks in your taxable account instead of cash. You will not need to pay those capital gains and they will not either. I don't know all the details but you could also look into setting up a donor advised fund for future charitable giving.

I agree with the prior comments that you should just sell all the stocks in the retirement accounts where taxes are not an issue and buy a few index funds. (watch out for wash sales)

On the taxable account: There is a quote that you will often see here, “The enemy of a good plan is the dream of a perfect plan.”

Your taxable account is of course a complex mess but the tax cost of cleaning it up may be too high to be worthwhile. With a dozen mutual funds and about 30 individual stocks the good news is that they are pretty diversified and sort of form your own tech heavy mutual fund. They are far from ideal but with a few exceptions you can just keep them and work around them with the rest of your portfolio planning.

A few things;
1) Sell any stock with a capital loss or trivial long term capital gain. Look at both percentages and the actual dollar amount. You can pick your own numbers but I would suggest selling anything that has less than a 10% long term capital gain or $1,000 in long term capital gains. With a four million dollar portfolio any taxes that you have to pay to do that will basically be a rounding error.

2) You only have two stocks with more than 1% of your portfolio. Apple and TDD. A problem with these, and especially Apple, is that your mutual funds also own these two stocks. I would bite the bullet and sell these off at least down to 1% of your portfolio and maybe even to 0%. Apple is about 7% of the S&P 500 so if you own another 3% of Apple in your taxable account that is about 10% of your stock holdings. That is a big diversification problem.

Microsoft and Amazon are also heavily weighted in the S&P500 so you may also want to sell those off.
https://www.slickcharts.com/sp500

3) Once you have cleaned up the stocks with those two steps you might be down to some something like 20 individual stocks in your taxable accounts. I would just keep them until you are retired and in a lower tax bracket then sell them off as you need money from your taxable account.


Duckie wrote: Sun Aug 07, 2022 6:45 pm Turn OFF all automatic dividend reinvestment in your taxable account. Actually, to avoid a potential wash sale turn it off in the IRAs, too. Send all dividends/distributions to your settlement fund or a money market. Don't buy more of anything until you figure out exactly what you plan to keep in the taxable account.
+1

That is what I was going to say. There are two reasons for this.

a) You don't want to buy any more of so many funds.

b) This will mean that a year from now any gains will be long term gains and they will be easier to figure out what to do.

In addition to the dividends also make sure that any capital gain distributions are not automatically reinvested. At some brokerages this is a separate setting and you may need to call their 800 number to set it up to not reinvest the capital gain distributions.
HomeStretch
Posts: 11335
Joined: Thu Dec 27, 2018 2:06 pm

Re: Portfolio Help with a messy portfolio

Post by HomeStretch »

AgeBee wrote: Sun Aug 07, 2022 1:00 amHis ESPP at eTrade
2.96% ADBE Adobe Inc…
Does the ESPP have a required holding period for shares purchased pursuant to the plan or are you free to sell the shares when acquired? If the latter, consider selling shares right after purchase rather than holding the shares. Consider it extra income (from the sale) rather than an investment.
His RSUs at eTrade
16.42% ADBE Adobe Inc. <--- :shock: To much is in my Adobe stocks. Not sure how much to take out …
Are these unvested RSUs or are these shares you received after vesting? If the latter, are the shares restricted or are you able to sell now?
Copernicus
Posts: 451
Joined: Thu May 16, 2013 4:38 pm

Re: Portfolio Help with a messy portfolio

Post by Copernicus »

Buy replacement funds fast, sell current holdings slowly.
Topic Author
AgeBee
Posts: 10
Joined: Sat Aug 06, 2022 4:32 pm

Re: Portfolio Help with a messy portfolio

Post by AgeBee »

retired@50 wrote: Sun Aug 07, 2022 6:38 am Welcome to the forum.
Some observations...

You're in a high tax bracket, so you'll need to pay attention to (and possibly learn a bit about) income taxes if you really want to minimize the pain of cleaning up the portfolio.

The Boglehead wiki page on paying a tax cost to switch funds could be instructive.

The Boglehead wiki page on tax loss harvesting should also be considered, given the number of individual positions you hold.

The Boglehead wiki also has a page that describes tax efficient fund placement. Reading this page will help you avoid fund placement errors like holding VFICX and VGSLX in your taxable account space.

You're making the far too frequent error of having too much in your employer's stock. While you may believe in the company, and they may be around for another 1,000 years, nobody really knows that for certain. Diversify your company holdings to reduce the risk of this position. Pay taxes if necessary. Try to keep it under 5% of your portfolio.

Know that transactions inside IRA, Roth IRA, 403b, & 401k accounts can be done with no tax consequences. So, cleaning up those accounts should be a snap.

Regards,
Thank you! That's solid advice. I'll read through the articles. Do you think I can do this on my own or is Taxadvisor a better option for us?
Topic Author
AgeBee
Posts: 10
Joined: Sat Aug 06, 2022 4:32 pm

Re: Portfolio Help with a messy portfolio

Post by AgeBee »

Outer Marker wrote: Sun Aug 07, 2022 6:45 am Welcome to the forum.

Wow. That is quite a thicket. Congratulations on your decision to clean it up.

May I ask how that happened?

In addition to livesoft's suggestion, I'd start selling off all the individual stock and small fund positions in taxable you can without triggering large capital gains. Sell off all losers, and use those to balance the gains from winners.

Consolidate your taxable to the extent possible into:
Total Stock Market and/or S&P 500 (not worth selling S&P 500 and incur gains as its practically the same)
Total International

Put priority on getting rid of tax inefficient funds in taxable like REIT and Intermediate Bond. They don't belong there.

Hold all your bonds in traditional IRA or traditional 401K space.

Conventional wisdom around here tends to be around 20% international, but it's debated forever.

If you're not up to the task of doing all the weeding and gardening that's required, a boglehead type advisor like Rick Ferri could take it on for you. If you take your time and do it slowly and methodically, you could do it yourself. The journey of a thousand miles . . .
Thank you for taking the time and responding. Solid advice - I obviously have some reading to do.
They way this happened: My wife had her father manage her portfolio. On my end I followed the Motley Fool for way to long and their philosophy of individual stocks. They've gotten so bad with their advice though. (I look at you Spotify). Plus a lot of negligence.

I'm in talks with some Financial Advisors right now to see what they have to offer. I'll reach out to Rick as well. Thanks again for taking the time!
Topic Author
AgeBee
Posts: 10
Joined: Sat Aug 06, 2022 4:32 pm

Re: Portfolio Help with a messy portfolio

Post by AgeBee »

bearwithbear wrote: Sun Aug 07, 2022 9:06 am AgeBee,

It looks like your long term capital gains tax rate is 20% for Feds and 10.3% state (CA).
Are there losses on some of these positions? Take the losses and sell as much stock with gains to match.
Charitable giving can be done with appreciated securities. Does not create a taxable gain for you.

You wrote that you will only be contributing to your retirement accounts. Nothing to taxable or savings. Does this mean that your high tax bracket is not this high ever year? If so the tax rates on the long term gains would go down for CA and possible for the Feds.

Don't let judge what to do solely on the amount of tax to be paid. The process of simplifying this portfolio might take many years if minimizing taxes is a consideration. That is not necessarily bad or good.

Best,
Bear
Thanks for the response. I admit that I don't have answers for your question. My wife is the one working with our Tax guy. We can ask him. We do have some losses (Thank you 2022!). So I could start there. I have to start the journey somewhere!
Topic Author
AgeBee
Posts: 10
Joined: Sat Aug 06, 2022 4:32 pm

Re: Portfolio Help with a messy portfolio

Post by AgeBee »

nedsaid wrote: Sun Aug 07, 2022 9:11 am My question is did you do all of this yourself? If so, you actually did a good job. Just eyeballing the stocks, I can see that you had the good sense to diversify across industries.
Thanks for the feedback. We just build it up over time. My wife had her dad do most of it. On my end I followed Motley Fool. On allocation though: I think we are to tech heavy.
nedsaid wrote: Sun Aug 07, 2022 9:11 am You have received great advice here so far, I don't have much to add. Wanted to make clear what we have is something good that can be improved and not a disaster.
Thank you for the comforting words! That makes me feel better.
nedsaid wrote: Sun Aug 07, 2022 9:11 am The four things that I would say is that individual stocks are an inefficient way to invest, learn about how investments are taxed, have at least 20% of your stocks invested Internationally, and write up an Investment Policy Statement.
Thanks! Great advice. I like the idea of an 'Investment Policy Statement' that is a good framework to have.
Topic Author
AgeBee
Posts: 10
Joined: Sat Aug 06, 2022 4:32 pm

Re: Portfolio Help with a messy portfolio

Post by AgeBee »

Duckie wrote: Sun Aug 07, 2022 6:45 pm To start I would:
  1. Turn OFF all automatic dividend reinvestment in your taxable account. Actually, to avoid a potential wash sale turn it off in the IRAs, too. Send all dividends/distributions to your settlement fund or a money market. Don't buy more of anything until you figure out exactly what you plan to keep in the taxable account.
  2. Go through every stock/bond/ETF/mutual fund in your taxable account and find out the current unrealized gain/loss. That way you'll have an idea of the tax hit if you sell everything (you won't).
  3. Sell everything with a loss in the taxable account. Even if you might want it later, sell it now. Make sure you don't purchase the same thing in a retirement account triggering a wash sale. If you want to sell something in taxable that is also in your retirement accounts, sell in the retirement account first. And by first I mean the day before.
  4. Sell some taxable assets with gains, enough so that the loss and gain balance each other out.
  5. Decide how much you are willing to pay this year in capital gains taxes and sell assets with gains up to that point.
You can clean up your retirement accounts without considering taxes but take your time doing it. I would continue to use the target-date funds in the employer plans for now to avoid potential wash sales because you can't turn off dividend reinvestment there. Eventually all your pre-tax accounts will probably be 100% bonds.
Thank you! Absolut solid advice - but I'm getting anxious just thinking about the enormity of this task. Especially figuring out the entire tax situation. I would not even know where to begin.

I'm in discussion with some financial planners and will discuss this plan with them and see if they can help execute it. Would that work?
Topic Author
AgeBee
Posts: 10
Joined: Sat Aug 06, 2022 4:32 pm

Re: Portfolio Help with a messy portfolio

Post by AgeBee »

So much good advice! Really appreciate your help with this.
Watty wrote: Sun Aug 07, 2022 10:57 pm You should edit your post to take out the company name of the company you work for and just call it a tech company. You can use the icon with a pencil on it to edit your post. There is not any reason that we need to know that and it makes your post less anonymous.
Done!
Watty wrote: Sun Aug 07, 2022 10:57 pm The company stock is the elephant in the room so focus on that first and not some stock that is 0.1% of your portfolio. It would be good to do a dummy tax return to make sure there are not any "gotcha's" but you should really just sell that company stock off.
Figuring out the potential taxes is my worst nightmare. Do you have a suggestion on how to create a dummy tax return. Is there an online calculator?
Watty wrote: Sun Aug 07, 2022 10:57 pm Not promptly selling RSUs has gotten lots of people into trouble.
Is that because the stocks tanked or because of Tax implications?

Watty wrote: Sun Aug 07, 2022 10:57 pm One thing that may not have been mentioned yet is that if you support a church or charity then you can give them shares of some of the stocks in your taxable account instead of cash. You will not need to pay those capital gains and they will not either. I don't know all the details but you could also look into setting up a donor advised fund for future charitable giving.
I have to investigate that.


Thank you so much for the other tips. A lot to figure out for me but I get your points and it all makes sense.
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AgeBee
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Joined: Sat Aug 06, 2022 4:32 pm

Re: Portfolio Help with a messy portfolio

Post by AgeBee »

Thank you for all the great advice!

HomeStretch wrote: Sun Aug 07, 2022 11:29 pm Does the ESPP have a required holding period for shares purchased pursuant to the plan or are you free to sell the shares when acquired? If the latter, consider selling shares right after purchase rather than holding the shares. Consider it extra income (from the sale) rather than an investment.
No holding period. I can sell them right away. What people told me is that I should hold them until term capital gains apply. (I think that's 2 years?!)

HomeStretch wrote: Sun Aug 07, 2022 11:29 pm Are these unvested RSUs or are these shares you received after vesting? If the latter, are the shares restricted or are you able to sell now?
It's a combination. Some of them have vested completely. Some are due over the next couple of years.
HomeStretch
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Re: Portfolio Help with a messy portfolio

Post by HomeStretch »

AgeBee wrote: Sun Aug 07, 2022 1:00 am His ESPP at eTrade
2.96% Techcompany (Anonymized after I received feedback)
His RSUs at eTrade
16.42% Techcompany <--- :shock: To much is in my company stocks Not sure how much to take out
Holding a single stock > 10% in the company that employs you is risky in terms of your portfolio especially as you get closer to retirement. Consider selling some now (and new ESPP and RSU shares as acquired) to reduce the holding to <10% and reinvest the proceeds in low-cost diversified funds/ETFs.
HomeStretch wrote: Sun Aug 07, 2022 11:29 pm Does the ESPP have a required holding period for shares purchased pursuant to the plan or are you free to sell the shares when acquired? If the latter, consider selling shares right after purchase rather than holding the shares. Consider it extra income (from the sale) rather than an investment.
AgeBee wrote: Wed Aug 10, 2022 9:37 pm No holding period. I can sell them right away. What people told me is that I should hold them until term capital gains apply. (I think that's 2 years?!)
Any ESPP purchase discount is taxable as ordinary income if sold before the holding period is over. However, holding the shares exposes you to possible market loss on the shares. You aren’t buying these shares as a long-term investment. Consider selling immediately after purchasing.
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Wiggums
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Re: Portfolio Help with a messy portfolio

Post by Wiggums »

For individual stock picking, at least you have good taste. I never held company stock long. It’s really just a diversification thing to me. I don’t like my paycheck and a large portion of stock coming from the same place.

Take your time on the taxable account. I agree with the comments that you need to nibble away at taxable a little each year. Waiting until retirement was another good suggestion.

For the accounts without tax implications, you can sell those stocks at anytime.

You really don’t have a “mess”, but when you retiree, you’ll appreciate the simplicity of holding less funds. Especially as you get older. Good luck to you. You are doing great.
"I started with nothing and I still have most of it left."
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retired@50
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Re: Portfolio Help with a messy portfolio

Post by retired@50 »

AgeBee wrote: Wed Aug 10, 2022 7:54 pm
retired@50 wrote: Sun Aug 07, 2022 6:38 am Welcome to the forum.
Some observations...

You're in a high tax bracket, so you'll need to pay attention to (and possibly learn a bit about) income taxes if you really want to minimize the pain of cleaning up the portfolio.

The Boglehead wiki page on paying a tax cost to switch funds could be instructive.

The Boglehead wiki page on tax loss harvesting should also be considered, given the number of individual positions you hold.

The Boglehead wiki also has a page that describes tax efficient fund placement. Reading this page will help you avoid fund placement errors like holding VFICX and VGSLX in your taxable account space.

You're making the far too frequent error of having too much in your employer's stock. While you may believe in the company, and they may be around for another 1,000 years, nobody really knows that for certain. Diversify your company holdings to reduce the risk of this position. Pay taxes if necessary. Try to keep it under 5% of your portfolio.

Know that transactions inside IRA, Roth IRA, 403b, & 401k accounts can be done with no tax consequences. So, cleaning up those accounts should be a snap.

Regards,
Thank you! That's solid advice. I'll read through the articles. Do you think I can do this on my own or is Taxadvisor a better option for us?
Well, if you already have a tax adviser or tax preparer that you're using, and are happy with, then I'd continue. They'll ask you for things like the cost basis of each of the holdings in the taxable account, which will help inform their decisions about what to sell and what to keep. This will likely require some additional time spent with the preparer so you can work through the particular details before the end of each year. Waiting until April may not be the best course of action.

If you're already filing your own taxes (self-prepared) with software or on paper, then it's certainly within your grasp to add to your existing tax knowledge about the consequences (and rules) of selling investments in a taxable account. Once you understand the basic rules, then all you have to do is decide how much in additional tax you're willing to pay to clean up the list of holdings.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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