Help! For a larger size taxable account do I pay an advisor?

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PatrickJoseph
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Help! For a larger size taxable account do I pay an advisor?

Post by PatrickJoseph » Fri Oct 26, 2018 4:45 pm

Very stressed out about this, losing sleep over what to do. I have a taxable account that I am not doing a good job managing.... mix of etfs, individual stocks, lost about 100K this year. For a taxable account is it worth it to hire an advisor quoting at just under 1% to manage the account and do tax loss harvesting, so yearly about 7K would be taken in advisor fees. Or what have other people done for a taxable account this size and sleep well at night. I hate the thought of paying about 1% but am convincing myself they would do a much better job and I would stop looking at the account daily stressing out over what to do. I plan to drip in 5k to 10K per month as well, again not sure what to keep buying. My stock choices have been really bad lately. So again looking for what others have done with a taxable account over 500K? What about just buying 2 or 3 ETF index funds and adjusting as needed? But again maybe an advisor is worth the 1% if they are tweaking it as needed quarterly and skilled at tax loss harvesting. If I sell everything in the account right now I am looking at a 100K loss as is. Suggestions welcome...

MittensMoney
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by MittensMoney » Fri Oct 26, 2018 4:47 pm

If you've lost money this year then you definitely need to change what you're doing. Handing the reigns over to an advisor may be a smart choice for you. You can try to reset and follow a good strategy by yourself, and believe me if you actually follow a good strategy you won't be having the same issues, but I assume that's what you tried when you created the account in the first place.

mhalley
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by mhalley » Fri Oct 26, 2018 4:53 pm

An advisor is hardly ever worth 1% IMHO. Look into wealthfront or betterment vanguard pas, fidelity go.

Grt2bOutdoors
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by Grt2bOutdoors » Fri Oct 26, 2018 5:03 pm

MittensMoney wrote:
Fri Oct 26, 2018 4:47 pm
If you've lost money this year then you definitely need to change what you're doing. Handing the reigns over to an advisor may be a smart choice for you. You can try to reset and follow a good strategy by yourself, and believe me if you actually follow a good strategy you won't be having the same issues, but I assume that's what you tried when you created the account in the first place.
The OP has not lost any money. He’s sitting on unrealized losses, you only lose when you sell

OP - list your portfolio in the manner shown in my signature “Asking Portfolio Questions”. What is your desired asset allocation? Have you written an Investment Policy Statement? View the wiki for examples.

No - you do not need an advisor unless you are not able to master your emotions and stop rolling the dice on individual lottery tickets( individual stock).
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Phineas J. Whoopee
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by Phineas J. Whoopee » Fri Oct 26, 2018 5:08 pm

Grt2bOutdoors wrote:
Fri Oct 26, 2018 5:03 pm
...
The OP has not lost any money. He’s sitting on unrealized losses, you only lose when you sell
...
I'm sorry, Grt2bOutdoors, but that's a very damaging misconception. An unrealized loss is still a loss. Believing otherwise leads to poor financial decisionmaking, like holding on to an inappropriate investment until its price recovers when the rational thing would be to sell it and buy something more appropriate.

To steal somebody else's extreme example, if I never sold my Enron stock have I not lost?

PJW

Jack FFR1846
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by Jack FFR1846 » Fri Oct 26, 2018 5:31 pm

Sounds like the problem is that you can’t leave it alone. You have to do something. Sell it all and put everything inti a vanguard target date fund. Then when you feel you need to do something, either buy or don’t
Bogle: Smart Beta is stupid

PFInterest
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by PFInterest » Fri Oct 26, 2018 5:38 pm

PatrickJoseph wrote:
Fri Oct 26, 2018 4:45 pm
mix of etfs, individual stocks, lost about 100K this year. For a taxable account is it worth it to hire an advisor quoting at just under 1% to manage the account and do tax loss harvesting, so yearly about 7K would be taken in advisor fees. Or what have other people done for a taxable account this size and sleep well at night. I hate the thought of paying about 1% but am convincing myself they would do a much better job and I would stop looking at the account daily stressing out over what to do. I plan to drip in 5k to 10K per month as well, again not sure what to keep buying. My stock choices have been really bad lately. So again looking for what others have done with a taxable account over 500K? What about just buying 2 or 3 ETF index funds and adjusting as needed? But again maybe an advisor is worth the 1% if they are tweaking it as needed quarterly and skilled at tax loss harvesting. If I sell everything in the account right now I am looking at a 100K loss as is. Suggestions welcome...
That's impressive. YTD total US is ~flat.....and you're down 15% :shock:
Last edited by PFInterest on Sat Oct 27, 2018 8:06 am, edited 1 time in total.

stuper1
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by stuper1 » Fri Oct 26, 2018 5:44 pm

It's really not complicated. You sell everything and you put 75% in a total stock market ETF and 25% in a total bond ETF (adjust initial percentages to your liking). When you make your monthly purchases, you buy in that same proportion. Every year, in the first week of December, you look at your percentages. Whichever of the two investments is over its target percent, you sell enough of it to get down to its target percent. Whichever one is less than its target percent, you sell it at a loss. Then you buy a very similar investment with the proceeds of those two sales.

That's it. You have just rebalanced and harvested your tax losses. Is it worth $7k+ to pay somebody for that? I sure wouldn't. All that quarterly "tweaking" is very unlikely to add any value.

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BL
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by BL » Fri Oct 26, 2018 5:49 pm

Vanguard PAS. 0.3%.
Look up on V website.
Good time to change with losses to avoid taxes.

Katietsu
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by Katietsu » Fri Oct 26, 2018 5:56 pm

I would consider hiring someone to help you get from here to there. You may need someone who is not looking to manage you long term. Take a look at the model of businesses like Aptus Wealth Management or Wealth Logic.

HappyWorkerBee
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by HappyWorkerBee » Fri Oct 26, 2018 6:36 pm

BL wrote:
Fri Oct 26, 2018 5:49 pm
Vanguard PAS. 0.3%.
Look up on V website.
I agree with this recommendation and I'll even throw in a couple links for the lazy:
https://investor.vanguard.com/advice/personal-advisor
https://investor.vanguard.com/financial ... ial-advice

I talked with Vanguard PAS this year and I liked them. I have a large taxable account and if I was going to hire someone to manage my money, they're the folks I would hire.

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arcticpineapplecorp.
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by arcticpineapplecorp. » Fri Oct 26, 2018 7:11 pm

Phineas J. Whoopee wrote:
Fri Oct 26, 2018 5:08 pm
Grt2bOutdoors wrote:
Fri Oct 26, 2018 5:03 pm
...
The OP has not lost any money. He’s sitting on unrealized losses, you only lose when you sell
...
I'm sorry, Grt2bOutdoors, but that's a very damaging misconception. An unrealized loss is still a loss. Believing otherwise leads to poor financial decisionmaking, like holding on to an inappropriate investment until its price recovers when the rational thing would be to sell it and buy something more appropriate.

To steal somebody else's extreme example, if I never sold my Enron stock have I not lost?

PJW
don't mean to hijack this thread but I'd like to more deeply define this term "loss". Phineas J. Whoopee, are you saying that investing in a single company that can go out of business leading to both paper and real losses (one and the same) is the same as owning the market which goes down from time to time but over time should continue to grow along with the growth of the economy?

I'm not saying it's not ever possible for the market to never recover, but the likelihood is much lower than an individual company losing value and never recovering.

I'm not sure it's an apt analogy. Now the OP is invested in individual stocks and those may never recover so wouldn't just be a paper loss. But I think we have to disaggregate that from a total world ETF for instance. No?
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

Momus
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by Momus » Fri Oct 26, 2018 7:14 pm

HappyWorkerBee wrote:
Fri Oct 26, 2018 6:36 pm
BL wrote:
Fri Oct 26, 2018 5:49 pm
Vanguard PAS. 0.3%.
Look up on V website.
I agree with this recommendation and I'll even throw in a couple links for the lazy:
https://investor.vanguard.com/advice/personal-advisor
https://investor.vanguard.com/financial ... ial-advice

I talked with Vanguard PAS this year and I liked them. I have a large taxable account and if I was going to hire someone to manage my money, they're the folks I would hire.
Agree... 500k isn't much. 5M maybe then you pay for that 0.3% advisor fee or just read a couple books recommended here. $30 books to save 150k. No brainer.

1% fee? is this highway robbery? :annoyed

MotoTrojan
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by MotoTrojan » Fri Oct 26, 2018 7:16 pm

arcticpineapplecorp. wrote:
Fri Oct 26, 2018 7:11 pm
Phineas J. Whoopee wrote:
Fri Oct 26, 2018 5:08 pm
Grt2bOutdoors wrote:
Fri Oct 26, 2018 5:03 pm
...
The OP has not lost any money. He’s sitting on unrealized losses, you only lose when you sell
...
I'm sorry, Grt2bOutdoors, but that's a very damaging misconception. An unrealized loss is still a loss. Believing otherwise leads to poor financial decisionmaking, like holding on to an inappropriate investment until its price recovers when the rational thing would be to sell it and buy something more appropriate.

To steal somebody else's extreme example, if I never sold my Enron stock have I not lost?

PJW
don't mean to hijack this thread but I'd like to more deeply define this term "loss". Phineas J. Whoopee, are you saying that investing in a single company that can go out of business leading to both paper and real losses (one and the same) is the same as owning the market which goes down from time to time but over time should continue to grow along with the growth of the economy?

I'm not saying it's not ever possible for the market to never recover, but the likelihood is much lower than an individual company losing value and never recovering.

I'm not sure it's an apt analogy. Now the OP is invested in individual stocks and those may never recover so wouldn't just be a paper loss. But I think we have to disaggregate that from a total world ETF for instance. No?
Most bears don’t rebound like 2008. Japan hasn’t regained. Inflation adjusted the depression took decades to. It’s a real loss, anything else is mental accounting.

FoolMeOnce
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by FoolMeOnce » Fri Oct 26, 2018 7:37 pm

arcticpineapplecorp. wrote:
Fri Oct 26, 2018 7:11 pm
Phineas J. Whoopee wrote:
Fri Oct 26, 2018 5:08 pm
Grt2bOutdoors wrote:
Fri Oct 26, 2018 5:03 pm
...
The OP has not lost any money. He’s sitting on unrealized losses, you only lose when you sell
...
I'm sorry, Grt2bOutdoors, but that's a very damaging misconception. An unrealized loss is still a loss. Believing otherwise leads to poor financial decisionmaking, like holding on to an inappropriate investment until its price recovers when the rational thing would be to sell it and buy something more appropriate.

To steal somebody else's extreme example, if I never sold my Enron stock have I not lost?

PJW
don't mean to hijack this thread but I'd like to more deeply define this term "loss". Phineas J. Whoopee, are you saying that investing in a single company that can go out of business leading to both paper and real losses (one and the same) is the same as owning the market which goes down from time to time but over time should continue to grow along with the growth of the economy?

I'm not saying it's not ever possible for the market to never recover, but the likelihood is much lower than an individual company losing value and never recovering.

I'm not sure it's an apt analogy. Now the OP is invested in individual stocks and those may never recover so wouldn't just be a paper loss. But I think we have to disaggregate that from a total world ETF for instance. No?
I think you and the others need to look at the term in the context of the OP's post. His account value has "lost" while the market has been flat it slightly up. It does not matter that it is unrealized loss, it matters that this underperformance is making OP question the current approach.

FoolMeOnce
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by FoolMeOnce » Fri Oct 26, 2018 7:43 pm

OP, I have a larger taxable account and left an advisor a year ago because I found the 0.75% annual fee a waste of money after discovering this website and similar ones and reading a lot. Take a breath. "My stock choices have been really bad lately." Stop making stock choices. Use broad index funds with low fees. Consider shifting to the three fund approach (search this site). If you really can't handle this, first try Vanguard's Personal Advisor Service, as others have suggested above. It only charged 0.3%.

Good luck.

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arcticpineapplecorp.
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by arcticpineapplecorp. » Fri Oct 26, 2018 9:34 pm

MotoTrojan wrote:
Fri Oct 26, 2018 7:16 pm
arcticpineapplecorp. wrote:
Fri Oct 26, 2018 7:11 pm
Phineas J. Whoopee wrote:
Fri Oct 26, 2018 5:08 pm
Grt2bOutdoors wrote:
Fri Oct 26, 2018 5:03 pm
...
The OP has not lost any money. He’s sitting on unrealized losses, you only lose when you sell
...
I'm sorry, Grt2bOutdoors, but that's a very damaging misconception. An unrealized loss is still a loss. Believing otherwise leads to poor financial decisionmaking, like holding on to an inappropriate investment until its price recovers when the rational thing would be to sell it and buy something more appropriate.

To steal somebody else's extreme example, if I never sold my Enron stock have I not lost?

PJW
don't mean to hijack this thread but I'd like to more deeply define this term "loss". Phineas J. Whoopee, are you saying that investing in a single company that can go out of business leading to both paper and real losses (one and the same) is the same as owning the market which goes down from time to time but over time should continue to grow along with the growth of the economy?

I'm not saying it's not ever possible for the market to never recover, but the likelihood is much lower than an individual company losing value and never recovering.

I'm not sure it's an apt analogy. Now the OP is invested in individual stocks and those may never recover so wouldn't just be a paper loss. But I think we have to disaggregate that from a total world ETF for instance. No?
Most bears don’t rebound like 2008. Japan hasn’t regained. Inflation adjusted the depression took decades to. It’s a real loss, anything else is mental accounting.
But I didn't say to invest in just one market did I? The ETF I mentioned was the total world stock market and I ask again, can we really argue that owning an individual stock is the same as owning the total world stock market index fund (or ETF)? One which will surely have permanent losses and the other, not (can you guess which?).

Again, the market eventually escaped the depression which some individual stocks did not. And it didn't take "decades to recover from the great depression. It took 4 1/2 years from the mid 1932 low. Then there was a second crash a few months after the recovery (in 1937) which then took until 1945 to recover from (either way if you don't want to be factual and instead want to count it as one long negative period from 1929-1945 that's 16 years. Where do you get "decades" to recover from? More like one and a half decade. Don't you think most invest for more than 16 years? I do, have, will continue to.

https://www.nytimes.com/2009/04/26/your ... 22%7D&_r=1&
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

MotoTrojan
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by MotoTrojan » Fri Oct 26, 2018 9:48 pm

arcticpineapplecorp. wrote:
Fri Oct 26, 2018 9:34 pm
MotoTrojan wrote:
Fri Oct 26, 2018 7:16 pm
arcticpineapplecorp. wrote:
Fri Oct 26, 2018 7:11 pm
Phineas J. Whoopee wrote:
Fri Oct 26, 2018 5:08 pm
Grt2bOutdoors wrote:
Fri Oct 26, 2018 5:03 pm
...
The OP has not lost any money. He’s sitting on unrealized losses, you only lose when you sell
...
I'm sorry, Grt2bOutdoors, but that's a very damaging misconception. An unrealized loss is still a loss. Believing otherwise leads to poor financial decisionmaking, like holding on to an inappropriate investment until its price recovers when the rational thing would be to sell it and buy something more appropriate.

To steal somebody else's extreme example, if I never sold my Enron stock have I not lost?

PJW
don't mean to hijack this thread but I'd like to more deeply define this term "loss". Phineas J. Whoopee, are you saying that investing in a single company that can go out of business leading to both paper and real losses (one and the same) is the same as owning the market which goes down from time to time but over time should continue to grow along with the growth of the economy?

I'm not saying it's not ever possible for the market to never recover, but the likelihood is much lower than an individual company losing value and never recovering.

I'm not sure it's an apt analogy. Now the OP is invested in individual stocks and those may never recover so wouldn't just be a paper loss. But I think we have to disaggregate that from a total world ETF for instance. No?
Most bears don’t rebound like 2008. Japan hasn’t regained. Inflation adjusted the depression took decades to. It’s a real loss, anything else is mental accounting.
But I didn't say to invest in just one market did I? The ETF I mentioned was the total world stock market and I ask again, can we really argue that owning an individual stock is the same as owning the total world stock market index fund (or ETF)? One which will surely have permanent losses and the other, not (can you guess which?).

Again, the market eventually escaped the depression which some individual stocks did not. And it didn't take "decades to recover from the great depression. It took 4 1/2 years from the mid 1932 low. Then there was a second crash a few months after the recovery (in 1937) which then took until 1945 to recover from (either way if you don't want to be factual and instead want to count it as one long negative period from 1929-1945 that's 16 years. Where do you get "decades" to recover from? More like one and a half decade. Don't you think most invest for more than 16 years? I do, have, will continue to.

https://www.nytimes.com/2009/04/26/your ... 22%7D&_r=1&
Fair enough, appreciate the fact-check. I still firmly believe a loss is a loss. The mantra can still be helpful at keeping people invested.

PatrickJoseph
Posts: 25
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by PatrickJoseph » Sat Oct 27, 2018 8:20 am

Thanks for all the responses! My taxable account is at Fidelity. So if I went to a 3 fund portfolio, how do the below 3 funds look? If I sell off the holdings in the account Im looking at an unfortnate 80K loss. Thinking I would do 60%- 70US / 20-30% Inernational / 10%- 20% Bonds. Suggestions? Also, do I need to worry about doing tax loss harvesting? Would be starting out with a big 80K loss to start with. Is there value in paying a vanguard manager .03 for managing? Are they just going to suggest a 3 fund portfolio? Do they add other value? Also, does it make sense to not do the 10% bonds if I have a 4% mortgage and just pay down the mortgage and skip bonds? Suggestions and advice is very much appreciated as I am beating myself up on making this last year way to stressful for myself with this account. Really do not want to pay an advisor if this is manageable myself.

Fidelity ZERO Total Market Index Fund (FZROX) or Fidelity Total Market Index Fund (FSKAX)
Fidelity ZERO International Index Fund (FZILX) or Fidelity Total International Index Fund (FTIHX)
Fidelity U. S. Bond Index Fund (FXNAX)

The fidelity index funds have zero fees but since this is a taxable account should I be looking at ETF's and not the above mutual funds for tax implications? use ETFs rather than mutual funds. For example, one could use Total Stock Market ETF (VTI) [1], Vanguard Total International Stock Index Fund (VXUS) [2] for international, and Vanguard Total Bond Market ETF (BND) ?

jvini
Posts: 85
Joined: Tue Apr 06, 2010 11:55 am

Re: Help! For a larger size taxable account do I pay an advisor?

Post by jvini » Sat Oct 27, 2018 8:46 am

FoolMeOnce wrote:
Fri Oct 26, 2018 7:43 pm
OP, I have a larger taxable account and left an advisor a year ago because I found the 0.75% annual fee a waste of money after discovering this website and similar ones and reading a lot. Take a breath. "My stock choices have been really bad lately." Stop making stock choices. Use broad index funds with low fees. Consider shifting to the three fund approach (search this site). If you really can't handle this, first try Vanguard's Personal Advisor Service, as others have suggested above. It only charged 0.3%.

Good luck.
Agree here. The longer I've invested the simpler I made things and my returns are good. I established a set of rules. #1 keep things simple. #2 stick to the rules. This means don't worry about short term volatility, prognosticators, the next big idea. I have essentially a three fund portfolio. Total market ETF gets 85% of my equity allocation. International ETF gets 15% of my equity allocation. Total bond gets my age - 13 of my total portfolio, and once that is 40% (very close now) I'll stick to that 60/40 portfolio. I rebalance once a year. I dollar cost average a decent sum every month into my equity ETFs (and rebalance into bonds once a year as I said) held in a decent sized taxable account, along with maxing a 401k. It's easy to do, my returns have been strong, I don't lose 1% on an advisor which really adds up. My fees are super low since Vanguard or Black Rock ETFs are very inexpensive.

I have about 3% of my portfolio in 6 individual stocks left over from my stock buying days. They've done well and I enjoy owning them, but that's a very small portion of the portfolio. I'm content with that and if I sold them I wouldn't really care. If you feel a need to someday own some, I'd keep it to that % or less.

It is definitely not worth losing sleep over. Maybe get some help on the best way to get out of the tangle you're in so you don't incur too much in capital gains taxes, although it sounds like that may not be a problem. That may be a good thing in this case.
Last edited by jvini on Sat Oct 27, 2018 8:50 am, edited 1 time in total.

PFInterest
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Joined: Sun Jan 08, 2017 12:25 pm

Re: Help! For a larger size taxable account do I pay an advisor?

Post by PFInterest » Sat Oct 27, 2018 8:50 am

PatrickJoseph wrote:
Sat Oct 27, 2018 8:20 am
If I sell off the holdings in the account Im looking at an unfortnate 80K loss.
this is excellent.....

there is a large wiki you should familiarize yourself with: https://www.bogleheads.org/wiki/Fidelity

JW-Retired
Posts: 7000
Joined: Sun Dec 16, 2007 12:25 pm

Re: Help! For a larger size taxable account do I pay an advisor?

Post by JW-Retired » Sat Oct 27, 2018 9:23 am

PatrickJoseph wrote:
Sat Oct 27, 2018 8:20 am
Also, do I need to worry about doing tax loss harvesting? Would be starting out with a big 80K loss to start with. Really do not want to pay an advisor if this is manageable myself.

Fidelity ZERO Total Market Index Fund (FZROX) or Fidelity Total Market Index Fund (FSKAX)
Fidelity ZERO International Index Fund (FZILX) or Fidelity Total International Index Fund (FTIHX)
Fidelity U. S. Bond Index Fund (FXNAX)
IMO, you could manage it if that will mean you don't keep fiddling with it.

You do need to consider the tax loss. If you have no other cap gains then the tax loss gets deducted from your ordinary income, but only up to $3k per year. If bigger than $3k the rest of the loss gets banked for subsequent years. Use against other than cap gains income is going to be the best use of it if your tax bracket is higher than 15%. If you avoid realizing future cap gains your $80k could last many years.

However, if you consume a lot of that $80k loss at a low or zero tax bracket that's kind of a waste. :annoyed
JW
Retired at Last

afan
Posts: 3925
Joined: Sun Jul 25, 2010 4:01 pm

Re: Help! For a larger size taxable account do I pay an advisor?

Post by afan » Sat Oct 27, 2018 9:33 am

PatrickJoseph wrote:
Sat Oct 27, 2018 8:20 am
Thanks for all the responses! My taxable account is at Fidelity. So if I went to a 3 fund portfolio, how do the below 3 funds look? If I sell off the holdings in the account Im looking at an unfortnate 80K loss. Thinking I would do 60%- 70US / 20-30% Inernational / 10%- 20% Bonds. Suggestions? Also, do I need to worry about doing tax loss harvesting? Would be starting out with a big 80K loss to start with. Is there value in paying a vanguard manager .03 for managing? Are they just going to suggest a 3 fund portfolio? Do they add other value? Also, does it make sense to not do the 10% bonds if I have a 4% mortgage and just pay down the mortgage and skip bonds? Suggestions and advice is very much appreciated as I am beating myself up on making this last year way to stressful for myself with this account. Really do not want to pay an advisor if this is manageable myself.

Fidelity ZERO Total Market Index Fund (FZROX) or Fidelity Total Market Index Fund (FSKAX)
Fidelity ZERO International Index Fund (FZILX) or Fidelity Total International Index Fund (FTIHX)
Fidelity U. S. Bond Index Fund (FXNAX)

The fidelity index funds have zero fees but since this is a taxable account should I be looking at ETF's and not the above mutual funds for tax implications? use ETFs rather than mutual funds. For example, one could use Total Stock Market ETF (VTI) [1], Vanguard Total International Stock Index Fund (VXUS) [2] for international, and Vanguard Total Bond Market ETF (BND) ?
For Fidelity there would be a small tax advantage to the etfs rather than the mutual fund. Note the word SMALL. For Vanguard, both the etfs and the mutual funds have the same tax advantage. Vanguard runs them as different share classes of the same fund, so the mutual funds are largely protected from forced capital gains distributions, just like the etfs.

If you keep your money at Fidelity, I assume there would be either a transaction fee to buy Vanguard mutual funds or a commission to buy vanguard etfs. Doing three purchases per month could add up to more costs that a minimizer would be willing to accept. But compared to the size of your portfolio, they would still be relatively small.

You do not need an advisor.
Going to three funds and sticking with your asset allocation is easier than logging onto Bogleheads to ask a question.

With the mutual funds you should be able to set up automatic monthly investments. Once that is done, you would do ABSOLUTELY NOTHING. That is the same thing a paid advisor would do, so no point in giving away your money to pay someone to do nothing.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

jvini
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Joined: Tue Apr 06, 2010 11:55 am

Re: Help! For a larger size taxable account do I pay an advisor?

Post by jvini » Sat Oct 27, 2018 9:54 am

Just to follow up, I use Fidelity. Most BlackRock ETFs are free to buy and sell and are VERY similar to Vanguard's. It's easy to create a three fund ETF portfolio. I'm assuming you have a 401k or IRA where you keep your bond allocation.

PatrickJoseph
Posts: 25
Joined: Wed Mar 11, 2015 9:32 pm

Re: Help! For a larger size taxable account do I pay an advisor?

Post by PatrickJoseph » Sat Oct 27, 2018 10:01 am

jvini wrote:
Sat Oct 27, 2018 9:54 am
Just to follow up, I use Fidelity. Most BlackRock ETFs are free to buy and sell and are VERY similar to Vanguard's. It's easy to create a three fund ETF portfolio. I'm assuming you have a 401k or IRA where you keep your bond allocation.
Thanks. So a bond fund should only be in a tax sheltered correct? So just keep index funds/efts in taxable account? So in the taxable account only 2 etfs should be there is doing a 3 fund porfolio of US /Int. / bonds?

jvini
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by jvini » Sat Oct 27, 2018 10:21 am

Bond fund yield is taxed at your current tax rate. So yes, assuming that it is high based on your monthly contribution, keep your bond allocation in your IRA or 401k if they offer a good option.

Your stock contribution will be in your brokerage account. That's excess money after you've maxed out your 401k.

You should look at all your money as one pot of money. It all makes up your portfolio.

Don't drive yourself crazy trying to get every single penny you think you can get by doing all sorts of crazy buying and selling. You will almost always come out behind.

So:
Max out your 401k.

Contribute excess cash to the two equity ETFs. I wouldn't do more than 20% into international, but that's a personal choice.

Rebalance into bonds once a year (or stocks if bonds outperform), within your tax advantaged accounts if possible (In other words if some of your holdings are equity etfs within your tax advantaged account, sell those and buy the bond fund or vice versa. You won't have to deal with capital gains taxes in your tax advantaged fund.)

Keep reading and learning. You may find that a Roth conversion is a good idea, or not (probably not if you're in a high tax bracket). Can you contribute to a Roth (probably not, but you can do a back door Roth). Can you make after tax contributions to a 401k and do an in service roll over so you do a mega back door Roth conversion each year (not many companies allow this).

There's lots of minutiae to consider eventually, but honestly if you just have a 3 fund portfolio and rebalance, along with dollar cost averaging, you'll be better off than most people. Remember, you're doing all this for security and to enjoy life. It seems like you make a nice living. If you're worrying and losing sleep, you're missing the point.

PatrickJoseph
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by PatrickJoseph » Sat Oct 27, 2018 11:01 am

afan wrote:
Sat Oct 27, 2018 9:33 am
PatrickJoseph wrote:
Sat Oct 27, 2018 8:20 am
Thanks for all the responses! My taxable account is at Fidelity. So if I went to a 3 fund portfolio, how do the below 3 funds look? If I sell off the holdings in the account Im looking at an unfortnate 80K loss. Thinking I would do 60%- 70US / 20-30% Inernational / 10%- 20% Bonds. Suggestions? Also, do I need to worry about doing tax loss harvesting? Would be starting out with a big 80K loss to start with. Is there value in paying a vanguard manager .03 for managing? Are they just going to suggest a 3 fund portfolio? Do they add other value? Also, does it make sense to not do the 10% bonds if I have a 4% mortgage and just pay down the mortgage and skip bonds? Suggestions and advice is very much appreciated as I am beating myself up on making this last year way to stressful for myself with this account. Really do not want to pay an advisor if this is manageable myself.

Fidelity ZERO Total Market Index Fund (FZROX) or Fidelity Total Market Index Fund (FSKAX)
Fidelity ZERO International Index Fund (FZILX) or Fidelity Total International Index Fund (FTIHX)
Fidelity U. S. Bond Index Fund (FXNAX)

The fidelity index funds have zero fees but since this is a taxable account should I be looking at ETF's and not the above mutual funds for tax implications? use ETFs rather than mutual funds. For example, one could use Total Stock Market ETF (VTI) [1], Vanguard Total International Stock Index Fund (VXUS) [2] for international, and Vanguard Total Bond Market ETF (BND) ?
For Fidelity there would be a small tax advantage to the etfs rather than the mutual fund. Note the word SMALL. For Vanguard, both the etfs and the mutual funds have the same tax advantage. Vanguard runs them as different share classes of the same fund, so the mutual funds are largely protected from forced capital gains distributions, just like the etfs.

If you keep your money at Fidelity, I assume there would be either a transaction fee to buy Vanguard mutual funds or a commission to buy vanguard etfs. Doing three purchases per month could add up to more costs that a minimizer would be willing to accept. But compared to the size of your portfolio, they would still be relatively small.

You do not need an advisor.
Going to three funds and sticking with your asset allocation is easier than logging onto Bogleheads to ask a question.

With the mutual funds you should be able to set up automatic monthly investments. Once that is done, you would do ABSOLUTELY NOTHING. That is the same thing a paid advisor would do, so no point in giving away your money to pay someone to do nothing.
jvini wrote:
Sat Oct 27, 2018 10:21 am
Bond fund yield is taxed at your current tax rate. So yes, assuming that it is high based on your monthly contribution, keep your bond allocation in your IRA or 401k if they offer a good option.

Your stock contribution will be in your brokerage account. That's excess money after you've maxed out your 401k.

You should look at all your money as one pot of money. It all makes up your portfolio.

Don't drive yourself crazy trying to get every single penny you think you can get by doing all sorts of crazy buying and selling. You will almost always come out behind.

So:
Max out your 401k.

Contribute excess cash to the two equity ETFs. I wouldn't do more than 20% into international, but that's a personal choice.

Rebalance into bonds once a year (or stocks if bonds outperform), within your tax advantaged accounts if possible (In other words if some of your holdings are equity etfs within your tax advantaged account, sell those and buy the bond fund or vice versa. You won't have to deal with capital gains taxes in your tax advantaged fund.)

Keep reading and learning. You may find that a Roth conversion is a good idea, or not (probably not if you're in a high tax bracket). Can you contribute to a Roth (probably not, but you can do a back door Roth). Can you make after tax contributions to a 401k and do an in service roll over so you do a mega back door Roth conversion each year (not many companies allow this).

There's lots of minutiae to consider eventually, but honestly if you just have a 3 fund portfolio and rebalance, along with dollar cost averaging, you'll be better off than most people. Remember, you're doing all this for security and to enjoy life. It seems like you make a nice living. If you're worrying and losing sleep, you're missing the point.
Thanks, your advice is extremely logical and is essentially what Im looking to do. Just trying to not mess it up this time and stick to a simple game plan and not give in to paying .07 - 1% to an advisor from financial engines. Im 4o years old with 3 kids and a own a small business that fluctuates so the added stress of my mutual fund and stock choices is not good for me. Income is in high tax bracket last 5 years but could change. Your right about life and enjoyment and I let a few poor choices affect that(had anxiety attacks I did not know could happen). This is long term though and have to look forward and go back to enjoying my blessings of kids, wife and religion. Just need to put this on somewhat of a "cruise control" with rebalancing from time to time. I just have a few more questions if you do not mind? 1) If I have a 15 - 25 year horizon do bonds really make sense? Or wait to implement bonds when Im 45 years old? However we at some point will face recession in next 2 years(very likely) might be in stealth one now. 2) Is there a place to hold a may 10 -20% allocation in a few active managed mutual funds in 401K? Or am I derailing a solid game plan already of the 3 fund portfolio? As markets get choppy will active mutual funds have a little edge? Guessing the answer is maybe but not a big enough to just keep it easy and index and sleep better? Thanks for you support and answers. Have you been investing for a long time? Do you have kids? Blessings, Joe

jvini
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by jvini » Sat Oct 27, 2018 11:57 am

Hi Joe. I'm not a financial advisor, so all I can offer is my own experience based on reading an inordinate amount on the subject of investing and continuing to do so on a daily basis as a hobby. (My nerdy logical passion that balances out my job in the creative field. Before that I was a lawyer for a brief time, so I definitely like to use the logical side of my brain).

I've been investing for about 25 years.

Yes, I have kids and we consider ourselves blessed. We work hard and do well and live below our means, but enjoy life. I'm in my early 50's now and invested through the great recession. It was hard, but we had our rules and stuck to them. I now allocate more to bonds after learning the hard way. : )

While you've provided some detail, there are many details I don't know and that you should consider. When do you want to retire, do you have 529s and what are you planning to pay for college, do you have long term care insurance, do you have a mortgage and what are the terms and do you want to pay it off early, among many more. This board is filled with great helpful people and topics. Read the Wiki! You'll get varying opinions here but many obviously feel like indexing through funds or ETF's is a great strategy. I agree.

I'll try to answer your questions in order the best I can. Others will surely weigh in. You have more than a 15-25 year time horizon hopefully. In other words, you're investing for your whole life into retirement not just until retirement. Yes, you should be investing in bonds in my opinion. To me, they are a way to lock in gains each year when the market is up and to cushion against a steep fall. Imagine if you had only stock ETF's in 2008. You would be in the fetal position mumbling to yourself about your losses. Not a good look! Don't be greedy, be smart. Bonds are also a way of keeping money aside to invest in stocks when they fall. Bonds may fall in tandem, yet not nearly as much. I use the formula age - 13 in a total bond fund like BND (Vanguard) or AGG (ishares). Some people do age in bonds, but that is too conservative for me, especially since people tend to live longer and that maxim is a bit dated. I think between age - 10 and 20 depending on your risk tolerance is good. I'd be comfortable with age -15 too, which is where I often end up early in the year based on investing new money. Also, bond funds may fall as rates rise, but in the long run you'll come out ahead!

Don't predict recessions. You might be right, you might be wrong. Stick to a plan! Imagine in 2011, when people said we were headed for a big fall, if you planned on waiting to invest when that big fall came. You would have missed out on HUGE gains through 2018. I happen to agree that a recession is coming up, but I'm doing nothing differently. I have bonds to absorb the shock and will buy equities low, which is great.

I would not hold actively managed funds along with Index funds. It just means you have overlap in stocks and are probably paying too high an expense ratio for that management, and for probably worse returns over the long run. If you own a total stock index, you likely own the stock in the managed fund. Also, you will always hear that it's time for stock pickers and managed funds will outperform, yet over the long run, indexes win. Look it up. Especially when you consider expense ratios of managed funds. Also, If you feel like you want to put a SMALL amount in some specific sector, like 1% of your portfolio, do it. Just don't mind if it goes way down. It's more of a psychological thing and a bit of a waste of time in my opinion.

Honestly, eat right, exercise, (meditate to calm yourself down) don't sweat the small stuff and realize what's most important in life, and you'll be happy. For me it's my family and loving what I do and appreciating the small things and everything that you have. Based on your posts, I think a simple 3 etf portfolio would be great for you. Rebalance once a year. Contribute monthly. Be a bit conservative with your money since things can fluctuate with your work. The great news is that keeping things simple when it comes to investing often has the best outcome. And keep learning. I try to. This is a great place for it, but don't get too caught up in the small stuff. And read The Bogleheads' Guide to the Three-Fund Portfolio, just written by the amazing Taylor Larimore, a huge contributor and patriarch of this board, and based on what I've read, a super nice guy!

Agggm
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by Agggm » Sat Oct 27, 2018 1:43 pm

PatrickJoseph wrote:
Fri Oct 26, 2018 4:45 pm
Very stressed out about this, losing sleep over what to do. I have a taxable account that I am not doing a good job managing.... mix of etfs, individual stocks, lost about 100K this year. For a taxable account is it worth it to hire an advisor quoting at just under 1% to manage the account and do tax loss harvesting, so yearly about 7K would be taken in advisor fees. Or what have other people done for a taxable account this size and sleep well at night. I hate the thought of paying about 1% but am convincing myself they would do a much better job and I would stop looking at the account daily stressing out over what to do. I plan to drip in 5k to 10K per month as well, again not sure what to keep buying. My stock choices have been really bad lately. So again looking for what others have done with a taxable account over 500K? What about just buying 2 or 3 ETF index funds and adjusting as needed? But again maybe an advisor is worth the 1% if they are tweaking it as needed quarterly and skilled at tax loss harvesting. If I sell everything in the account right now I am looking at a 100K loss as is. Suggestions welcome...
I do my own investing. But if you're getting stressed, you shouldn't.

Call Vanguards Personal Advisory service. Fees? They charge a bracketed schedule of 0.30% to 0.05% of AUM.

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BL
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by BL » Sat Oct 27, 2018 2:14 pm

jvini wrote:
Sat Oct 27, 2018 11:57 am
Hi Joe. I'm not a financial advisor, so all I can offer is my own experience based on reading an inordinate amount on the subject of investing and continuing to do so on a daily basis as a hobby. (My nerdy logical passion that balances out my job in the creative field. Before that I was a lawyer for a brief time, so I definitely like to use the logical side of my brain).

I've been investing for about 25 years.

Yes, I have kids and we consider ourselves blessed. We work hard and do well and live below our means, but enjoy life. I'm in my early 50's now and invested through the great recession. It was hard, but we had our rules and stuck to them. I now allocate more to bonds after learning the hard way. : )

While you've provided some detail, there are many details I don't know and that you should consider. When do you want to retire, do you have 529s and what are you planning to pay for college, do you have long term care insurance, do you have a mortgage and what are the terms and do you want to pay it off early, among many more. This board is filled with great helpful people and topics. Read the Wiki! You'll get varying opinions here but many obviously feel like indexing through funds or ETF's is a great strategy. I agree.

I'll try to answer your questions in order the best I can. Others will surely weigh in. You have more than a 15-25 year time horizon hopefully. In other words, you're investing for your whole life into retirement not just until retirement. Yes, you should be investing in bonds in my opinion. To me, they are a way to lock in gains each year when the market is up and to cushion against a steep fall. Imagine if you had only stock ETF's in 2008. You would be in the fetal position mumbling to yourself about your losses. Not a good look! Don't be greedy, be smart. Bonds are also a way of keeping money aside to invest in stocks when they fall. Bonds may fall in tandem, yet not nearly as much. I use the formula age - 13 in a total bond fund like BND (Vanguard) or AGG (ishares). Some people do age in bonds, but that is too conservative for me, especially since people tend to live longer and that maxim is a bit dated. I think between age - 10 and 20 depending on your risk tolerance is good. I'd be comfortable with age -15 too, which is where I often end up early in the year based on investing new money. Also, bond funds may fall as rates rise, but in the long run you'll come out ahead!

Don't predict recessions. You might be right, you might be wrong. Stick to a plan! Imagine in 2011, when people said we were headed for a big fall, if you planned on waiting to invest when that big fall came. You would have missed out on HUGE gains through 2018. I happen to agree that a recession is coming up, but I'm doing nothing differently. I have bonds to absorb the shock and will buy equities low, which is great.

I would not hold actively managed funds along with Index funds. It just means you have overlap in stocks and are probably paying too high an expense ratio for that management, and for probably worse returns over the long run. If you own a total stock index, you likely own the stock in the managed fund. Also, you will always hear that it's time for stock pickers and managed funds will outperform, yet over the long run, indexes win. Look it up. Especially when you consider expense ratios of managed funds. Also, If you feel like you want to put a SMALL amount in some specific sector, like 1% of your portfolio, do it. Just don't mind if it goes way down. It's more of a psychological thing and a bit of a waste of time in my opinion.

Honestly, eat right, exercise, (meditate to calm yourself down) don't sweat the small stuff and realize what's most important in life, and you'll be happy. For me it's my family and loving what I do and appreciating the small things and everything that you have. Based on your posts, I think a simple 3 etf portfolio would be great for you. Rebalance once a year. Contribute monthly. Be a bit conservative with your money since things can fluctuate with your work. The great news is that keeping things simple when it comes to investing often has the best outcome. And keep learning. I try to. This is a great place for it, but don't get too caught up in the small stuff. And read The Bogleheads' Guide to the Three-Fund Portfolio, just written by the amazing Taylor Larimore, a huge contributor and patriarch of this board, and based on what I've read, a super nice guy!
+1
1. 3-fund is fine if you can leave it alone and not add to it.
2. Low cost index balanced fund if you have trouble not tinkering ( Fidelity® Four-in-One Index Fund
MUTF: FFNOX or F target index fund).
3. Vanguard PAS if you just can't leave it alone. (Note 0.3% = 0.003, not .03)
4. Watch out for non-V advisers, as they may be looking out for themselves.
5. Read this free pdf: https://www.etf.com/docs/IfYouCan.pdf

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Phineas J. Whoopee
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by Phineas J. Whoopee » Sat Oct 27, 2018 3:33 pm

arcticpineapplecorp. wrote:
Fri Oct 26, 2018 7:11 pm
Phineas J. Whoopee wrote:
Fri Oct 26, 2018 5:08 pm
Grt2bOutdoors wrote:
Fri Oct 26, 2018 5:03 pm
...
The OP has not lost any money. He’s sitting on unrealized losses, you only lose when you sell
...
I'm sorry, Grt2bOutdoors, but that's a very damaging misconception. An unrealized loss is still a loss. Believing otherwise leads to poor financial decisionmaking, like holding on to an inappropriate investment until its price recovers when the rational thing would be to sell it and buy something more appropriate.

To steal somebody else's extreme example, if I never sold my Enron stock have I not lost?

PJW
don't mean to hijack this thread but I'd like to more deeply define this term "loss". Phineas J. Whoopee, are you saying that investing in a single company that can go out of business leading to both paper and real losses (one and the same) is the same as owning the market which goes down from time to time but over time should continue to grow along with the growth of the economy?

I'm not saying it's not ever possible for the market to never recover, but the likelihood is much lower than an individual company losing value and never recovering.

I'm not sure it's an apt analogy. Now the OP is invested in individual stocks and those may never recover so wouldn't just be a paper loss. But I think we have to disaggregate that from a total world ETF for instance. No?
A loss occurred in the past. It already happened. Future events don't change it, whatever they may be, and however likely.

It is very dangerous, as I detailed in my post you quoted, to suppose in one's mind that a loss is not a loss.

PJW

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Toons
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by Toons » Sat Oct 27, 2018 3:52 pm

Buy Vanguard Balanced Index Fund(Admiral)
Pay .07 in expense ratio
Reinvest
Tweak Nothing.
Hold for decades
Ignore The Noise
:sharebeer
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

inbox788
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by inbox788 » Sat Oct 27, 2018 4:06 pm

MittensMoney wrote:
Fri Oct 26, 2018 4:47 pm
If you've lost money this year then you definitely need to change what you're doing. Handing the reigns over to an advisor may be a smart choice for you. You can try to reset and follow a good strategy by yourself, and believe me if you actually follow a good strategy you won't be having the same issues, but I assume that's what you tried when you created the account in the first place.
The advisor could be the reason investors lose money this year. If the index average is up 0.5% for the year, and the advisor charges 1% AUM, you'd be down 0.5% for the year with the advisor. If things keep fluctuating around zero, having or not having an advisor may be the difference between being up or down this year.

Now if you're down 3% and the advisor puts you in funds that is also down 3% - 1% AUM, you'd be down 4% instead. Good luck picking "an above average advisor", and let us know how you pick them. And how you'd avoid the below average advisors who wind up losing more than average :shock: .
Last edited by inbox788 on Sat Oct 27, 2018 4:07 pm, edited 1 time in total.

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arcticpineapplecorp.
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by arcticpineapplecorp. » Sat Oct 27, 2018 4:07 pm

Phineas J. Whoopee wrote:
Sat Oct 27, 2018 3:33 pm
A loss occurred in the past. It already happened. Future events don't change it, whatever they may be, and however likely.

It is very dangerous, as I detailed in my post you quoted, to suppose in one's mind that a loss is not a loss.

PJW
but then wouldn't the opposite be true? A gain occurred in the past this year. It already happened. Future events don't change it?

The market was up 9-10% for the year until recently. Did investors gain 9-10% in the past? They just gave that entire's years worth of gains back. So did they have gains of 9-10% or losses of 9-10%? I'm confused.

Also another poster used the term mental accounting but I'm not sure that's technically the correct term being debated here. Mental accounting deals with money being fungible despite where it's located; it deals with people divying up resources or segmenting income rather than seeing it as one whole. I'm not sure that is the correct application of the term:

https://www.investopedia.com/university ... ioral5.asp
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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Phineas J. Whoopee
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by Phineas J. Whoopee » Sat Oct 27, 2018 4:22 pm

arcticpineapplecorp. wrote:
Sat Oct 27, 2018 4:07 pm
Phineas J. Whoopee wrote:
Sat Oct 27, 2018 3:33 pm
A loss occurred in the past. It already happened. Future events don't change it, whatever they may be, and however likely.

It is very dangerous, as I detailed in my post you quoted, to suppose in one's mind that a loss is not a loss.

PJW
but then wouldn't the opposite be true? A gain occurred in the past this year. It already happened. Future events don't change it?

The market was up 9-10% for the year until recently. Did investors gain 9-10% in the past? They just gave that entire's years worth of gains back. So did they have gains of 9-10% or losses of 9-10%? I'm confused.
...
Yes, of course, and it isn't the opposite. Time monotonically increases. You get to decide on the time period you want to measure.

That's where conflating verb tenses can be hazardous to your wealth springs from. "The market is going up 12% per year." No, the market has gone up 12% per year. We don't know what it is doing now, let alone what it will do in the future.

I'll paraphrase myself from a recent post in a different thread: There's a fiction out there which has two misleading aspects: 1) never lose money; and 2) you don't lose unless you sell. Accepting it creates irrational actions, like not withdrawing from one's portfolio even if one needs to in order to meet current expenses, which was the context of my post in the other thread.

Investopedia's explanation of the term compounding is relevant.

A loss is a loss. It already happened. Accept the fact.

PJW

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Re: Help! For a larger size taxable account do I pay an advisor?

Post by drk » Sat Oct 27, 2018 5:01 pm

PatrickJoseph wrote:
Fri Oct 26, 2018 4:45 pm
Very stressed out about this, losing sleep over what to do. I have a taxable account that I am not doing a good job managing.... mix of etfs, individual stocks, lost about 100K this year. For a taxable account is it worth it to hire an advisor quoting at just under 1% to manage the account and do tax loss harvesting, so yearly about 7K would be taken in advisor fees.
If that's all you want, pay 0.25% to have Betterment handle it for you.

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Watty
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by Watty » Sat Oct 27, 2018 5:10 pm

Agggm wrote:
Sat Oct 27, 2018 1:43 pm
Call Vanguards Personal Advisory service. Fees? They charge a bracketed schedule of 0.30% to 0.05% of AUM.
+1

and they will not put you into expensive investments just to make more money off of you.

After you have used them for a year or two things may be cleaned up enough that you could then manage it yourself once your investments are pretty much on automatic pilot.

Just for brainstorming since you are "Very stressed out about this, losing sleep over what to do." then one option to consider if you have a large mortage is to pay that off so that your investing accounts are more manageable. There are all sorts of opinions on the "Should I pay off the mortage?" question and no one right answer but if that would reduce your stress level then that might be worth considering.

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Re: Help! For a larger size taxable account do I pay an advisor?

Post by TomatoTomahto » Sat Oct 27, 2018 5:19 pm

Very stressed out about this, losing sleep over what to do. I have a taxable account that I am not doing a good job managing.... mix of etfs, individual stocks, lost about 100K this year. For a taxable account is it worth it to hire an advisor quoting at just under 1% to manage the account and do tax loss harvesting, so yearly about 7K would be taken in advisor fees. Or what have other people done for a taxable account this size and. . .
The cause of the problem in the first sentence is found in the second sentence. What makes you think that a taxable account needs to be “managed?”

You wanted input as to what others have done with taxable accounts over $500k. Our taxable account is over $500k. We lost a good amount of money over the past few weeks. I generally don’t TLH, but since we realized some capital gains previously (to raise cash for a house purchase), I did some TLH to offset those prior gains as much as I could. I’m an idiot, and I could do it myself. Note that I don’t clean my own house, do my own taxes, mow my own lawn or do my own gardening; those require actual skill. :beer

Pay more than $7k to avoid a few clicks of the mouse? Are you kidding? And, frankly, since our taxable account will be inherited by our heirs, IMO it’s not worth it to TLH. Will your taxable account also be primarily for your heirs?
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: Help! For a larger size taxable account do I pay an advisor?

Post by dknightd » Sat Oct 27, 2018 5:30 pm

Being able to sleep at night is very important. Do whatever you think you need to get the sleep you need.

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arcticpineapplecorp.
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by arcticpineapplecorp. » Sat Oct 27, 2018 8:54 pm

Phineas J. Whoopee wrote:
Sat Oct 27, 2018 4:22 pm
Yes, of course, and it isn't the opposite. Time monotonically increases. You get to decide on the time period you want to measure.

That's where conflating verb tenses can be hazardous to your wealth springs from. "The market is going up 12% per year." No, the market has gone up 12% per year. We don't know what it is doing now, let alone what it will do in the future.

I'll paraphrase myself from a recent post in a different thread: There's a fiction out there which has two misleading aspects: 1) never lose money; and 2) you don't lose unless you sell. Accepting it creates irrational actions, like not withdrawing from one's portfolio even if one needs to in order to meet current expenses, which was the context of my post in the other thread.

Investopedia's explanation of the term compounding is relevant.

A loss is a loss. It already happened. Accept the fact.

PJW
I guess I'm having a hard time understanding this because everytime the market has gone down and I would have assumed I lost money, then the market went up and because I didn't sell anything after it went down, the value of my investments recovered and then went up further. So I'm really having a hard time agreeing that it's a loss when it really isn't until I sell the asset at a loss. If I wait and its value recovers and continues higher and I sell for a higher price I am honestly not seeing how it was a loss. It was a loss in the past. It was a paper loss, an unrealized loss as you say. But a gain in the future? It seems like a semantic game. I understand nothing's certain and just because something has recovered doesn't mean it will again, but I don't understand why anyone would continue investing if they felt like they lost every time the market went down (and the recent post shows the market spends about 75% in drawdown mode which makes sense because the market doesn't make new highs all the time so naturally it would be at some level lower than a previous high). We continue to invest because we believe prices will recover and go higher in the future and want to buy more shares at now lower prices.

We can get esoteric and say we lose money and don't even see or realize it, i.e., inflation. Certain assets depreciate and we may not appreciate they lose value until we try to sell it (cars) or look it up on kelly blue book. Yes, you can look up stock prices just the same. But car values generally go in one direction, whereas the stock market can go up after it has gone down (Brexit is an example of this). And of course it can go down after it has gone up (recent market decline as an example of giving up the year's gains so far). But the year, or decade, or investing period is not over yet (and perhaps that's what you're referring to by "You get to decide on the time period you want to measure."

Can you look at this final example and give your response: let's say you invest $100. The next day the investment falls to $99. You would say you lost $1. "A loss is a loss. It already happened. Accept the fact."

But here's the thing: The next day, let's say it rises $1 and goes back to $100 from the previous day's $99 value. Would you then say you "made a $1" because your investment is worth $1 more than the day before? A gain is a gain. It already happened. Accept the fact?

I don't see it that way, but am interested if you do because that appears to follow your logical way of thinking. I wouldn't say you've gained anything. You're simply back to where you started so how could you have gained anything? But by your logic if your unit of account is higher than it was (the day before, but not higher than you started with), you've gained. If it was lower than it was, you've lost. Is that how you see it? Are you only measuring unit of account from the day's prior value and not from the point at which you invested?

If that's true then what does that do to the definition of capital gains and losses? They aren't losses because they are less value than they were prior. They're losses only if they're sold at a lower value than what you purchased them for (and opposite for gains). In another post "How to exit out of the stock market" I made this very point, that if Sophia14 chooses to sell at what she considers a loss because the market has gone down, it could actually be a gain if she sells it now but bought it prior at an even lower price. So did she "lose" money because the market fell or did she make money because she's selling it for a higher price than she bought it originally? You see the confusion with the terminology here.

Thanks for hanging in there with me. I'm really trying to understand how/why I'm seeing this wrong. I don't particularly find it a helpful way of thinking because I don't believe losses are losses or gains are gains until they've been locked in (meaning the asset has been sold at that price and you've accepted the loss or gain). Until then, value simply has changed. But I'm trying to be open to a different way of viewing this, especially if it can help me in some way, but I haven't been convinced yet. Thanks for the discussion though.
Last edited by arcticpineapplecorp. on Sat Oct 27, 2018 9:33 pm, edited 2 times in total.
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Rowan Oak
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by Rowan Oak » Sat Oct 27, 2018 9:31 pm

arcticpineapplecorp. wrote:
Sat Oct 27, 2018 8:54 pm
Phineas J. Whoopee wrote:
Sat Oct 27, 2018 4:22 pm
Yes, of course, and it isn't the opposite. Time monotonically increases. You get to decide on the time period you want to measure.

That's where conflating verb tenses can be hazardous to your wealth springs from. "The market is going up 12% per year." No, the market has gone up 12% per year. We don't know what it is doing now, let alone what it will do in the future.

I'll paraphrase myself from a recent post in a different thread: There's a fiction out there which has two misleading aspects: 1) never lose money; and 2) you don't lose unless you sell. Accepting it creates irrational actions, like not withdrawing from one's portfolio even if one needs to in order to meet current expenses, which was the context of my post in the other thread.

Investopedia's explanation of the term compounding is relevant.

A loss is a loss. It already happened. Accept the fact.

PJW
I guess I'm having a hard time understanding this because everytime the market has gone down and I would have assumed I lost money, then the market went up and because I didn't sell anything after it went down, the value of my investments recovered and then went up further. So I'm really having a hard time agreeing that it's a loss when it really isn't until I sell the asset at a loss. If I wait and it's value recovers and continues higher and I sell for a higher price I am honestly not seeing how it was a loss. It was a loss in the past. It was a paper loss, an unrealized loss as you say. But a gain in the future? It seems like a semantic game. I understand nothing's certain and just because something has recovered doesn't mean it will again, but I don't understand why anyone would continue investing if they felt like they lost every time the market went down (and the recent post shows the market spends about 75% in drawdown mode which makes sense because the market doesn't make new highs all the time so naturally it would be at some level lower than a previous high). We continue to invest because we believe prices will recover and go higher in the future and want to buy more shares at now lower prices.

We can get esoteric and say we lose money and don't even see or realize it, i.e., inflation. Certain assets depreciate and we may not appreciate they lose value until we try to sell it (cars) or look it up on kelly blue book. Yes, you can look up stock prices just the same. But car prices generally go in one direction, whereas the stock market can go up after it has gone down (Brexit is an example of this). And of course it can go down after it has gone up (recent market decline as an example of giving up the year's gains so far). But the year, or decade, or investing period is not over yet (and perhaps that's what you're referring to by "You get to decide on the time period you want to measure."

Can you look at this final example and give your response: let's say you invest $100. The next day the investment falls to $99. You would say you lost $1. "A loss is a loss. It already happened. Accept the fact."

But here's the thing: The next day, let's say it rises $1 and goes back to $100 from the previous day's $99 value. Would you then say you "made a $1" because your investment is worth $1 more than the day before? A gain is a gain. It already happened. Accept the fact?

I don't see it that way, but am interested if you do because that appears to follow your logical way of thinking. I wouldn't say you've gained anything. You're simply back to where you started so how could you have gained anything? But by your logic if your unit of account is higher than it was (the day before, but not higher than you started with), you've gained. If it was lower than it was, you've lost. Is that how you see it? Are you only measuring unit of account from the day's prior value and not from the point at which you invested?

If that's true then what does that do to the definition of capital gains and losses? They aren't losses because they are less value than they were prior. They're losses only if they're sold at a lower value than what you purchased them for (and opposite for gains). In another post "How to exit out of the stock market" I made this very point, that if Sophia14 chooses to sell at what she considers a loss because the market has gone down, it could actually be a gain if she sells it now but bought it prior at an even lower price. So did she "lose" money because the market fell or did she make money because she's selling it for a higher price than she bought it originally? You see the confusion with the terminology here.

Thanks for hanging in there with me. I'm really trying to understand how/why I'm seeing this wrong. I don't particularly find it a helpful way of thinking because I don't believe losses are losses or gains are gains until they've been locked in (meaning the asset has been sold at that price and you've accepted the loss or gain). Until then, value simply has changed. But I'm trying to be open to a different way of viewing this, especially if it can help me in some way, but I haven't been convinced yet. Thanks for the discussion though.
arcticpineapplecorp:

This is an interesting discussion. I've always thought more about the number of shares I own and the potential of those shares to go up or down in value. Of course, you have to be an optimist and believe they will, in the long run, be higher in value regardless of how many times they were down along the way. So I agree that
losses aren't losses and gains aren't gains until you've sold and accepted the loss or gain.
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

FoolMeOnce
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by FoolMeOnce » Sat Oct 27, 2018 9:57 pm

PatrickJoseph wrote:
Sat Oct 27, 2018 11:01 am
2) Is there a place to hold a may 10 -20% allocation in a few active managed mutual funds in 401K?
Only if you know which active funds will beat the market.

(You don't)

drzzzzz
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by drzzzzz » Sat Oct 27, 2018 10:23 pm

Most of the individuals on this thread will disagree but look into Vanguard's Wellington fund (VWENX) if you think having an active fund manager is more to your liking rather than the typical indexed three funds - they have a stellar long term track record and i believe the individual whose name this web-site refers to still is very positive about them and still invests some of his money with this fund.

Grt2bOutdoors
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by Grt2bOutdoors » Sun Oct 28, 2018 3:45 am

Phineas J. Whoopee wrote:
Fri Oct 26, 2018 5:08 pm
Grt2bOutdoors wrote:
Fri Oct 26, 2018 5:03 pm
...
The OP has not lost any money. He’s sitting on unrealized losses, you only lose when you sell
...
I'm sorry, Grt2bOutdoors, but that's a very damaging misconception. An unrealized loss is still a loss. Believing otherwise leads to poor financial decisionmaking, like holding on to an inappropriate investment until its price recovers when the rational thing would be to sell it and buy something more appropriate.

To steal somebody else's extreme example, if I never sold my Enron stock have I not lost?

PJW
At the time of my post the OP had not made a detailed disclosure of actual position, gains or losses in each of positions, so maybe he did lose or maybe what he “lost” is the market appreciation from time of purchase. Some people confuse what the actual “loss” is. Without having read further responses at time of post, I stand by statement.
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Grt2bOutdoors
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by Grt2bOutdoors » Sun Oct 28, 2018 3:55 am

PFInterest wrote:
Fri Oct 26, 2018 5:38 pm
PatrickJoseph wrote:
Fri Oct 26, 2018 4:45 pm
mix of etfs, individual stocks, lost about 100K this year. For a taxable account is it worth it to hire an advisor quoting at just under 1% to manage the account and do tax loss harvesting, so yearly about 7K would be taken in advisor fees. Or what have other people done for a taxable account this size and sleep well at night. I hate the thought of paying about 1% but am convincing myself they would do a much better job and I would stop looking at the account daily stressing out over what to do. I plan to drip in 5k to 10K per month as well, again not sure what to keep buying. My stock choices have been really bad lately. So again looking for what others have done with a taxable account over 500K? What about just buying 2 or 3 ETF index funds and adjusting as needed? But again maybe an advisor is worth the 1% if they are tweaking it as needed quarterly and skilled at tax loss harvesting. If I sell everything in the account right now I am looking at a 100K loss as is. Suggestions welcome...
That's impressive. YTD total US is ~flat.....and you're down 15% :shock:
If you invested your money in September when the market was at all time high, yah you could be down 10% or more. Why? EM is down 15%, total international is down 15%, tech stocks and certain other equities are down more than that, US market is flat, but down 10%+ from highs.

I’m not shocked.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: Help! For a larger size taxable account do I pay an advisor?

Post by indexonlyplease » Sun Oct 28, 2018 5:46 am

Jack FFR1846 wrote:
Fri Oct 26, 2018 5:31 pm
Sounds like the problem is that you can’t leave it alone. You have to do something. Sell it all and put everything inti a vanguard target date fund. Then when you feel you need to do something, either buy or don’t
+1

This is why I keep saying that the Target Date Fund is best for most investors. Because you fund it and there is nothing else to do. Sure you could do better maybe, but why take a chance. I beleive to many of us that have a little knowledge in the market think we can do better so we continure to play until it is to late.

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Re: Help! For a larger size taxable account do I pay an advisor?

Post by arcticpineapplecorp. » Sun Oct 28, 2018 10:26 am

Grt2bOutdoors wrote:
Sun Oct 28, 2018 3:55 am
If you invested your money in September when the market was at all time high, yah you could be down 10% or more. Why? EM is down 15%, total international is down 15%, tech stocks and certain other equities are down more than that, US market is flat, but down 10%+ from highs.

I’m not shocked.
not to pick at nits but EM is down -17.01% and total international is down -12.66% (see below) so your numbers are off a bit. Not sure where you're getting your numbers from.

Image
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by Grt2bOutdoors » Sun Oct 28, 2018 10:36 am

arcticpineapplecorp. wrote:
Sun Oct 28, 2018 10:26 am
Grt2bOutdoors wrote:
Sun Oct 28, 2018 3:55 am
If you invested your money in September when the market was at all time high, yah you could be down 10% or more. Why? EM is down 15%, total international is down 15%, tech stocks and certain other equities are down more than that, US market is flat, but down 10%+ from highs.

I’m not shocked.
not to pick at nits but EM is down -17.01% and total international is down -12.66% (see below) so your numbers are off a bit. Not sure where you're getting your numbers from.

Image
I’m making an approximate guess. Didn’t have time to check, but my actively managed DFA EM fund us down more than the Index Vanguard uses.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

inbox788
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Re: Help! For a larger size taxable account do I pay an advisor?

Post by inbox788 » Mon Oct 29, 2018 2:20 am

PatrickJoseph wrote:
Fri Oct 26, 2018 4:45 pm
For a taxable account is it worth it to hire an advisor quoting at just under 1% to manage the account and do tax loss harvesting, so yearly about 7K would be taken in advisor fees.
...I plan to drip in 5k to 10K per month as well, again not sure what to keep buying.
NO, don't pay those exorbitant fees, for no guarantee of performance. Just buy Total US Stock Market Index!

What makes you think an advisor wouldn't lose more money? Some can, and all will leech 1% off your profits. Just use a 3 fund portfolio and odds are you'll do better than either you're doing now or with an advisor. The larger the size of the account, the less it makes sense to pay an advisor. If you have $700,000, he'll collect his $7,000 and when you have $2,000,000, he'll be collecting $20,000 for doing same nothing. He's not going to guarantee you'll beat the market or even match it, and minus his 1%, chances are you'll lose to the market return less his 1% fee. If you go low cost index funds, you might lose to the market 0.04% or even less.

https://www.youtube.com/watch?v=EC8rWTGZhak#t=24m09s

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Re: Help! For a larger size taxable account do I pay an advisor?

Post by Murgatroyd » Mon Oct 29, 2018 4:53 am

jvini wrote:
Sat Oct 27, 2018 9:54 am
Just to follow up, I use Fidelity. Most BlackRock ETFs are free to buy and sell and are VERY similar to Vanguard's. It's easy to create a three fund ETF portfolio. I'm assuming you have a 401k or IRA where you keep your bond allocation.
Here are the 3 Blackrock IShares ETF’s you need:
ITOT is the total US market
IXUS is the total international market
IUSB is the total US bond market

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