How to transition positions

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Jambavan
Posts: 1
Joined: Thu Jan 10, 2019 7:53 am

How to transition positions

Post by Jambavan » Thu Jan 10, 2019 8:12 am

Long time lurker, first time poster. I have 169K in individual dividend producing equities and REITS in a taxable account. Would like to transition to a total return approach using low cost index funds. About 38% of the port is up and the total port just barely shaved in above the S&P 500 index. Age 66. Retirement in next two years, but that is mostly covered through other investments.
Any suggestions on how to transition from these positions to funds in terms of time horizon and selling off this group.
Thanks very much.

dbr
Posts: 29798
Joined: Sun Mar 04, 2007 9:50 am

Re: How to transition positions

Post by dbr » Thu Jan 10, 2019 10:28 am

Assuming you are mainly concerned with taxes, the things to do include the following:

1. Make a table of the unrealized gains and losses in order to find the opportunities to sell at best advantage. That means anything at a loss should be exchanged now and things with crazy gains might be left for later. If you have losses they can offset the ones with gains, but keep in mind the most effective use of losses is offsetting short term gains and ordinary income ($3000/year) rather than long term gains.
2. Don't continue to invest in things you don't want by taking your dividends and putting them in the investments you want.
3. Compare your tax situation now to what it will be when you retire. You might have more room to absorb taxable gains when your income stops. That can also include the period between age 62 and when you start delayed Social Security at age 70, if that applies to you.
4. In general the riskiness of individual investments outweighs the tax cost of diversifying. Your portfolio may contain enough investments to not be extremely risky at all, however,

livesoft
Posts: 67276
Joined: Thu Mar 01, 2007 8:00 pm

Re: How to transition positions

Post by livesoft » Thu Jan 10, 2019 10:39 am

Interesting if barely shaved in above S&P500 index, but that's before taxes on dividends right?

@dbr has given the advice I would give:

1. Stop buying any of the old stuff especially with auto reinvestments.

2. Sell all losers now, but see if the qualified dividend situation might change if you sell now or a few weeks later.

3. Use the realized losses to offset gains and sell enough gains to offset the realized losses. Pay attention to short- and long-term.

4. Tell us what is left.

5. Use cash to invest now. You might end up with a mix of old portfolio and new portfolio, but at that time if you want more help, please ask.
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HappyJack
Posts: 65
Joined: Thu Jan 10, 2019 7:45 am

Re: How to transition positions

Post by HappyJack » Mon Jan 14, 2019 8:38 pm

Thanks.

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