Adding funds to portfolio full of individual stocks

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jrk
Posts: 12
Joined: Mon Mar 13, 2017 9:29 pm

Adding funds to portfolio full of individual stocks

Post by jrk » Sun Oct 15, 2017 8:34 pm

All my current investments are 100% individual US stocks (brokerage + Tradisional IRA). Since my recent introduction to Bogleheads and reading the material here, I have realized that I need to change my strategy.

I am looking at the following funds. I need to eventually work towards a good asset allcoation plan (ex. owning the age in bonds, I am 34 now), but what do you say about the following funds? I don't have employer 401K plan, and not much room in trad IRA due to $5500/yr limit. That's why 80% of my investments are in personal brokerage account. Also, do any of these suite better for IRA than brokerage?

VTSMX - Vanguard Total Stock Market Index Fund
VBMFX - Vanguard Total Bond Market Index Fund
and maybe,
VGTSX - Vanguard Total International Stock Index Fun

Thank you

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CaliJim
Posts: 2800
Joined: Sun Feb 28, 2010 8:47 pm
Location: California, near the beach

Re: Adding funds to portfolio full of individual stocks

Post by CaliJim » Sun Oct 15, 2017 10:25 pm

Welcome to the party.

There are a lot of advocates here for those three funds.

Funds: viewtopic.php?f=10&t=88005

Placement: https://www.bogleheads.org/wiki/Tax-eff ... _placement

"Required Reading": https://www.bogleheads.org/wiki/Getting_started
-calijim- | | For more info, click this Wiki

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Garco
Posts: 686
Joined: Wed Jan 23, 2013 2:04 am

Re: Adding funds to portfolio full of individual stocks

Post by Garco » Sun Oct 15, 2017 10:42 pm

I think all of these funds have ETF equivalents, and likely somewhat lower ER's.

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Sandtrap
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Joined: Sat Nov 26, 2016 6:32 pm
Location: HawaiišŸ˜€ Northern AZ.šŸ˜³

Re: Adding funds to portfolio full of individual stocks

Post by Sandtrap » Sun Oct 15, 2017 10:48 pm

Some helpful links:
Bogle Philosophy
https://www.bogleheads.org/wiki/Boglehe ... philosophy
Here are links to the wiki's "Getting Started" and "Investing Startup Kit" pages:
https://www.bogleheads.org/wiki/Getting_started
https://www.bogleheads.org/wiki/Boglehe ... art-up_kit
Define General Investment Goals and Objectives
https://www.bogleheads.org/wiki/Invest ... _statement
Suggested Reading List
https://www.bogleheads.org/RecommendedReading.php
Post format
viewtopic.php?f=1&t=6212

DSInvestor
Posts: 10773
Joined: Sat Oct 04, 2008 11:42 am

Re: Adding funds to portfolio full of individual stocks

Post by DSInvestor » Sun Oct 15, 2017 10:53 pm

Are you a W-2 employee working at a company that does not offer an employer sponsored retirement plan? If you're self employed with no employees other than your spouse, you can open a Solo 401k and get a lot more tax advantaged contribution than $5500 for IRA.

Boglehead wiki page on Solo 401k: https://www.bogleheads.org/wiki/Solo_401(k)_plan
Wiki

retiredjg
Posts: 32137
Joined: Thu Jan 10, 2008 12:56 pm

Re: Adding funds to portfolio full of individual stocks

Post by retiredjg » Mon Oct 16, 2017 8:50 am

jrk wrote: ā†‘
Sun Oct 15, 2017 8:34 pm
Also, do any of these suite better for IRA than brokerage?
The two stock funds are very tax-efficient and are good choices for the taxable account. I'd put the bonds in the IRA. If there is any extra space, you can leave some of the individual stocks there in the IRA.

jrk
Posts: 12
Joined: Mon Mar 13, 2017 9:29 pm

Re: Adding funds to portfolio full of individual stocks

Post by jrk » Mon Oct 16, 2017 9:42 pm

Thank you all!

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CyclingDuo
Posts: 1327
Joined: Fri Jan 06, 2017 9:07 am

Re: Adding funds to portfolio full of individual stocks

Post by CyclingDuo » Tue Oct 17, 2017 9:51 am

jrk wrote: ā†‘
Sun Oct 15, 2017 8:34 pm
All my current investments are 100% individual US stocks (brokerage + Tradisional IRA). Since my recent introduction to Bogleheads and reading the material here, I have realized that I need to change my strategy.

I am looking at the following funds. I need to eventually work towards a good asset allcoation plan (ex. owning the age in bonds, I am 34 now), but what do you say about the following funds? I don't have employer 401K plan, and not much room in trad IRA due to $5500/yr limit. That's why 80% of my investments are in personal brokerage account. Also, do any of these suite better for IRA than brokerage?

VTSMX - Vanguard Total Stock Market Index Fund
VBMFX - Vanguard Total Bond Market Index Fund
and maybe,
VGTSX - Vanguard Total International Stock Index Fun

Thank you
You can use all the dividends you are getting from your individual stocks to help fund the money going into index funds. If you really want to sell the individual stocks and pay all of the capital gains, come up with a plan to spread out the selling over a number of years to mitigate your annual tax bill - or come up with a plan on how you would finance that tax bill if you sold them all now. In the meantime, the dividend throw is an excellent way to get quarterly additions to your new index funds.

If you don't have enough room or space in the tax deferred IRA for your Bond Fund, Vanguard has a nice Municipal Bond Fund that is fine to hold in taxable.

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