Simplyfing a Portfolio - Looking for Advice
Posted: Wed Sep 12, 2018 8:53 am
Hello,
NOTE: Post updated to include detailed portfolio info + personal info
Let me start by thanking folks in advance for their thoughts on my questions and to the board as a whole. I've been lurking on the board for several months and just joined. I really appreciate the depth and breadth of knowledge presented as well as the civility of the board. Apologies in advance for the length of this post as well as what I am sure will be some of my financial ignorance on display.
TL:DR: I want to consolidate/simplify my portfolio (as well as make it more Bogle-like) but need advice on how to untangle my current portfolio, especially in regard to taxes + a couple of other related questions.
The good news:
- I starting investing pretty early (23) and stayed the course, even when it was painful.
- I avoided high-risk individual stocks, a 'great' real estate deal outside Detroit <g>, and other pitfalls. And I took advantage of most of the tax-advantaged vehicles available to me.
- Due the above, and honestly some very good luck with a business sale almost a decade ago, I think I am solid shape financially (details below).
- In an effort to consolidate, simplify, and adopt a more-Bogle-like investing approach, I've recently reduced the number of Investment companies I use from 3 to 1 (now just with Fidelity), and the number of mutual funds and ETFs we own by about a third.
The less good news:
- Even after the consolidation above, between my wife and I, I still have 24 funds in 9 different accounts(including treasury/money market funds). The only silver lining is that I can now see them all in one place which makes some of the analysis easier.
- Over the years, my overly-eager efforts to diversify my investments, along with a couple of job changes, has left me with a variety of funds in a variety of accounts (taxable, ROTH IRAs, 401K, Traditional IRAs).
- While I'm not too out of whack in terms of my stock/bonds allocation goal (75/25), several of the funds I am invested in are expensive, actively managed mutual funds or ETFs with relatively high fees, and again, due to the number of funds and the make-up of each, it is difficult to understand my portfolio. I really want to simplify and reduce my investment expenses.
High-level Summary:
Age: Me (50), Wife (48), kids (20, 16)
Net-worth: $4.2M
Emergency Fund: 6-months cash - $50K
Debt: $340K home mortgage @ 3.25% (30-yr fixed)
Invested Assets: $3.272M
Taxable accounts: $2.252M (13 funds total, 8 are "cheap" Vanguard funds, and 5 are higher-expense funds, including $500K sitting in cash (!) due recent forced stock sale)
Tax-advantaged: $1.020M (Variety of current and old 401Ks, ROTHs and Tradition IRAs for my wife and I)
Tax Status: Married Filing Jointly
Fed Tax Bracket: 33%
State Tax (VA): 5.75%
His & Hers Taxable Accounts
SYMBOL NAME Value/%Portfolio Expense Capital Gains
SPAXX Fidelity Gov. MM $110K - 3.4% (0.42) $0
EFG Equity Growth ETF $136K - 4.1% (0.40) $37K
FSTVX Fidelity Total Market $61K - 1.9% (0.015) $1K
FTEXX Fid. Mun. MM $178K - 5.4% (0.41) $0K
GLTR Precious Metals ETF $48K - 1.5% (0.60) (-$12K)
IGM iShares N, American Tech $176K - 5.4% (0.47) $126K
IVOO Vanguard Mid-Cap Equity $121K - 3.7% (0.15) $70K
SCHP Schwab TIPS $211K - 6.4% (0.05) $11K
VBK Vanguard Sm Cap Equity $129K - 3.9% (0.07) $79K
VCIT Vanguard Int. Corp Bond $104K - 3.2% (0.07) $3K
VCSH Vang. Short Corp Bonds $50K - $1.5% (0.06) $0
VEA Vanguard Intern. $121K - 3.7% (0.07) $22K
VNQ Vang Real Estate $77K - 2.3% (0.12) $35K
VTI Vang Total Stock Market $364K - 11.1% (0.04) $215K
FCASH Fidelity Cash $231K - .0% (0.40) $0
XYZ MegaCorp Ind. Stock $91K – 2.8% 0 (-$1K)
His Rollover IRA
FDGFX Fid. Div. Growth Equity $81K – 2.5% (0.52)
His ROTH IRA (Conversion)
FCNTX Fidelity Contrafund Stock $48K – 1.5% (0.74)
His ROTH IRA
FCNTX Fidelity Contrafund Stock $99K – 3.0% (0.74)
His 401K with old employer (MegaCorp)
TDLK Small/Mid Cap Equity Index $180 – 5.5% Unknown??
TDLO Small/Mid Cap Equity Fund $182K – 5.5% Unknown
TDLP International Equity $117K - 3.6% Unknown
TDMK Large Cap Equity Fund $167K - 5.3% Unknown
His new 401K
PBHAX High Yield Bonds $2K – 1.8% (0.81)
Her ROTH IRA (Conversion)
FCNTX Fidelity Contrafund Stock $48K – 1.5% (0.74)
Her ROTH IRA
FCNTX Fidelity Contrafund Stock $99K – 3.0% (0.74)
Her Rollover IRA
FBDIX Fid. Total Bond $59K – 1.6%% (0.52)
So what is the problem?
While I think I now have a good handle on the "as-is' of my portfolio, and at least a pretty good idea of what I'd like the "to-be" to look like (3 o 4 fund bogle allocation with maybe 5% in other to play around with), I'm running into some roadblocks. Here is where I am stuck:
1. Taxable accounts: If I were to "start over" and move the 13 funds in my taxable accounts into a 3 or 4 Bogle-recommended funds (with very low fees), I would have to recognize $583K in cap gains (I think) - ouch! Of that amount, $225K of cap gains is represented by funds with higher expense loads and the rest is with 8 Vanguard funds (but with the exception of VTI, not specific Vanguards I am targeting.) So those are really my initial focus. Many of my tax-advantaged accounts need to be have their investments moved into new funds also, but at least I can do that without tax implications. So do I -
- Stick with the funds I already have in the taxable accounts to avoid the big capital gains hit?
- Pull the band-aid off in one pull and just pay the taxes in one lump sum this year?
- Stagger the move to the new funds over several tax years to alleviate the pinch (I really don't have any significant losses to harvest)?
- I also welcome thoughts on the funds in my portfolio and where to go from here.
2. ROTH Accounts: Currently my wife and I have two ROTH accounts? One account (each) is a ROTH conversion (formerly a Traditional IRA that I paid to convert) and the other is a "standard" ROTH that I started from scratch. I know I need at least two ROTH accounts as they are associated with distinct individuals, but can I combine the two accounts that are in each of our names? All four accounts are invested in the same thing - just looking to simplify from 4 ROTH accounts down to 2 accounts.
UPDATE: Questioned Answered – Thank you!
3. Identifying His 401K Funds: I am not able to look-up the four funds in my old 401K with MegaCorp (TDLO, TDLK, TDMK, TDLP)? I found this really odd. While I will likely roll these funds over into a Rollover IRA, I found it bizarre I wasn’t able to quick look up the expense ratios, etc. using the trading symbols Anybody know what these funds are? Are they proprietary? FWIW, MegaCorp uses Fidelity for their 401K plan.
Thanks again for any thoughts on the above. I have been pretty heads down work-wise for the last two decades, and I am realizing that I need to do a better job here.
NOTE: Post updated to include detailed portfolio info + personal info
Let me start by thanking folks in advance for their thoughts on my questions and to the board as a whole. I've been lurking on the board for several months and just joined. I really appreciate the depth and breadth of knowledge presented as well as the civility of the board. Apologies in advance for the length of this post as well as what I am sure will be some of my financial ignorance on display.
TL:DR: I want to consolidate/simplify my portfolio (as well as make it more Bogle-like) but need advice on how to untangle my current portfolio, especially in regard to taxes + a couple of other related questions.
The good news:
- I starting investing pretty early (23) and stayed the course, even when it was painful.
- I avoided high-risk individual stocks, a 'great' real estate deal outside Detroit <g>, and other pitfalls. And I took advantage of most of the tax-advantaged vehicles available to me.
- Due the above, and honestly some very good luck with a business sale almost a decade ago, I think I am solid shape financially (details below).
- In an effort to consolidate, simplify, and adopt a more-Bogle-like investing approach, I've recently reduced the number of Investment companies I use from 3 to 1 (now just with Fidelity), and the number of mutual funds and ETFs we own by about a third.
The less good news:
- Even after the consolidation above, between my wife and I, I still have 24 funds in 9 different accounts(including treasury/money market funds). The only silver lining is that I can now see them all in one place which makes some of the analysis easier.
- Over the years, my overly-eager efforts to diversify my investments, along with a couple of job changes, has left me with a variety of funds in a variety of accounts (taxable, ROTH IRAs, 401K, Traditional IRAs).
- While I'm not too out of whack in terms of my stock/bonds allocation goal (75/25), several of the funds I am invested in are expensive, actively managed mutual funds or ETFs with relatively high fees, and again, due to the number of funds and the make-up of each, it is difficult to understand my portfolio. I really want to simplify and reduce my investment expenses.
High-level Summary:
Age: Me (50), Wife (48), kids (20, 16)
Net-worth: $4.2M
Emergency Fund: 6-months cash - $50K
Debt: $340K home mortgage @ 3.25% (30-yr fixed)
Invested Assets: $3.272M
Taxable accounts: $2.252M (13 funds total, 8 are "cheap" Vanguard funds, and 5 are higher-expense funds, including $500K sitting in cash (!) due recent forced stock sale)
Tax-advantaged: $1.020M (Variety of current and old 401Ks, ROTHs and Tradition IRAs for my wife and I)
Tax Status: Married Filing Jointly
Fed Tax Bracket: 33%
State Tax (VA): 5.75%
His & Hers Taxable Accounts
SYMBOL NAME Value/%Portfolio Expense Capital Gains
SPAXX Fidelity Gov. MM $110K - 3.4% (0.42) $0
EFG Equity Growth ETF $136K - 4.1% (0.40) $37K
FSTVX Fidelity Total Market $61K - 1.9% (0.015) $1K
FTEXX Fid. Mun. MM $178K - 5.4% (0.41) $0K
GLTR Precious Metals ETF $48K - 1.5% (0.60) (-$12K)
IGM iShares N, American Tech $176K - 5.4% (0.47) $126K
IVOO Vanguard Mid-Cap Equity $121K - 3.7% (0.15) $70K
SCHP Schwab TIPS $211K - 6.4% (0.05) $11K
VBK Vanguard Sm Cap Equity $129K - 3.9% (0.07) $79K
VCIT Vanguard Int. Corp Bond $104K - 3.2% (0.07) $3K
VCSH Vang. Short Corp Bonds $50K - $1.5% (0.06) $0
VEA Vanguard Intern. $121K - 3.7% (0.07) $22K
VNQ Vang Real Estate $77K - 2.3% (0.12) $35K
VTI Vang Total Stock Market $364K - 11.1% (0.04) $215K
FCASH Fidelity Cash $231K - .0% (0.40) $0
XYZ MegaCorp Ind. Stock $91K – 2.8% 0 (-$1K)
His Rollover IRA
FDGFX Fid. Div. Growth Equity $81K – 2.5% (0.52)
His ROTH IRA (Conversion)
FCNTX Fidelity Contrafund Stock $48K – 1.5% (0.74)
His ROTH IRA
FCNTX Fidelity Contrafund Stock $99K – 3.0% (0.74)
His 401K with old employer (MegaCorp)
TDLK Small/Mid Cap Equity Index $180 – 5.5% Unknown??
TDLO Small/Mid Cap Equity Fund $182K – 5.5% Unknown
TDLP International Equity $117K - 3.6% Unknown
TDMK Large Cap Equity Fund $167K - 5.3% Unknown
His new 401K
PBHAX High Yield Bonds $2K – 1.8% (0.81)
Her ROTH IRA (Conversion)
FCNTX Fidelity Contrafund Stock $48K – 1.5% (0.74)
Her ROTH IRA
FCNTX Fidelity Contrafund Stock $99K – 3.0% (0.74)
Her Rollover IRA
FBDIX Fid. Total Bond $59K – 1.6%% (0.52)
So what is the problem?
While I think I now have a good handle on the "as-is' of my portfolio, and at least a pretty good idea of what I'd like the "to-be" to look like (3 o 4 fund bogle allocation with maybe 5% in other to play around with), I'm running into some roadblocks. Here is where I am stuck:
1. Taxable accounts: If I were to "start over" and move the 13 funds in my taxable accounts into a 3 or 4 Bogle-recommended funds (with very low fees), I would have to recognize $583K in cap gains (I think) - ouch! Of that amount, $225K of cap gains is represented by funds with higher expense loads and the rest is with 8 Vanguard funds (but with the exception of VTI, not specific Vanguards I am targeting.) So those are really my initial focus. Many of my tax-advantaged accounts need to be have their investments moved into new funds also, but at least I can do that without tax implications. So do I -
- Stick with the funds I already have in the taxable accounts to avoid the big capital gains hit?
- Pull the band-aid off in one pull and just pay the taxes in one lump sum this year?
- Stagger the move to the new funds over several tax years to alleviate the pinch (I really don't have any significant losses to harvest)?
- I also welcome thoughts on the funds in my portfolio and where to go from here.
2. ROTH Accounts: Currently my wife and I have two ROTH accounts? One account (each) is a ROTH conversion (formerly a Traditional IRA that I paid to convert) and the other is a "standard" ROTH that I started from scratch. I know I need at least two ROTH accounts as they are associated with distinct individuals, but can I combine the two accounts that are in each of our names? All four accounts are invested in the same thing - just looking to simplify from 4 ROTH accounts down to 2 accounts.
UPDATE: Questioned Answered – Thank you!
3. Identifying His 401K Funds: I am not able to look-up the four funds in my old 401K with MegaCorp (TDLO, TDLK, TDMK, TDLP)? I found this really odd. While I will likely roll these funds over into a Rollover IRA, I found it bizarre I wasn’t able to quick look up the expense ratios, etc. using the trading symbols Anybody know what these funds are? Are they proprietary? FWIW, MegaCorp uses Fidelity for their 401K plan.
Thanks again for any thoughts on the above. I have been pretty heads down work-wise for the last two decades, and I am realizing that I need to do a better job here.