Buy and Hold Question - New Boglehead

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FootballFan5548
Posts: 262
Joined: Mon May 01, 2017 2:20 pm

Buy and Hold Question - New Boglehead

Post by FootballFan5548 »

Before finding this site I had no real strategy and no real investment plan. I bought (and stupidly sold) a bunch of random individual stocks and ETF's. Some of the ETF's I will keep, BND, SPY, VT, etc... but I also have some pretty random groupings of individual stocks.

In total I have 38 stock/etf's amounting to roughly $106k in my Capital One Brokerage account. Most of these, 27 of 38, have a long term capital gain. The remaining 11 have losses, but overall the portfolio is up significantly about 20%.

With the limited information I've given you guys, do you think I should cash out of most of these individual stocks and try to clean up the account a bit before reinvesting into indexes? I could probably do a decent job of canceling gains with losses to make it a minor tax event.

It's just overwhelming and impossible to track 38 separate stocks/etf's, I'd love to bring that number down significantly for ease of tracking.
Note - I'd plan to keep the mega winners like FB, AAPL, BRKB, GE, MSFT, MET.

The alternative approach would basically be, just continue to hold these for the long run or until I need funds/retirement...

Thanks
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flamesabers
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Joined: Fri Mar 03, 2017 12:05 pm
Location: Rochester, MN

Re: Buy and Hold Question - New Boglehead

Post by flamesabers »

Hello.

I dislike holding individual stocks as I find it to be much too risky for my preferences. I would suggest cashing out the individual stocks, especially now that the gains will pretty much wipe out the losses. Once you do that, I would recommend investing in a simple portfolio like the 3-fund portfolio.

https://www.bogleheads.org/wiki/Three-fund_portfolio
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David Jay
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Location: Michigan

Re: Buy and Hold Question - New Boglehead

Post by David Jay »

I would sell all of the losers, add up my total loss, then sell an equivalent amount of gains of those stocks that you do not want to hold long term. That will cost you nothing in taxes (losses will offset gains) and will "clean up" a lot of your complexity.

Then you can further look at the other gainers and decide how to handle them.

A question: Do you have any tax-advantaged space available to you? I would take maximum advantage of any tax-advantaged space by using the proceeds from the sales (above) to fund 401K/403b/tIRA/Roth accounts, the tax-free growth over your lifetime is well worth it.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
PFInterest
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Joined: Sun Jan 08, 2017 12:25 pm

Re: Buy and Hold Question - New Boglehead

Post by PFInterest »

the short answer....definitely.
Topic Author
FootballFan5548
Posts: 262
Joined: Mon May 01, 2017 2:20 pm

Re: Buy and Hold Question - New Boglehead

Post by FootballFan5548 »

David Jay wrote:I would sell all of the losers, add up my total loss, then sell an equivalent amount of gains of those stocks that you do not want to hold long term. That will cost you nothing in taxes (losses will offset gains) and will "clean up" a lot of your complexity.

Then you can further look at the other gainers and decide how to handle them.

A question: Do you have any tax-advantaged space available to you? I would take maximum advantage of any tax-advantaged space by using the proceeds from the sales (above) to fund 401K/403b/tIRA/Roth accounts, the tax-free growth over your lifetime is well worth it.
Thanks for your responses and it seems my answer is pretty clear, so I appreciate the help.
I currently max out my 401k of $18k per year with a 6% company match.
I just executed my first ever tIRA to Roth IRA for both my wife and I earlier this month.

Foolishly, for years (I'm 33) I had not been investing in an IRA because I'm over the income cap for the deduction, so I thought I could not invest in an IRA at all. So I definitely missed about a decade of investable years for my wife and I in my IRA which irks me.
bigred77
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Joined: Sat Jun 11, 2011 4:53 pm

Re: Buy and Hold Question - New Boglehead

Post by bigred77 »

I don't know what your tax bracket is but I suspect if you liquidated the whole thing you'd owe about $3.5k in taxes (maybe less).

That's an acceptable price to pay (for me) to streamline your investments now (and reset the cost basis in the process) once you have a well thought out plan in place that you can keep over the long term.
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