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Those who buy SOME individual stocks, where do you put them?

Posted: Mon Nov 04, 2019 10:21 pm
by manlymatt83
Those who buy SOME individual stocks (as 5% - 10% of your overall holdings, etc.)... . How do you determine whether to put them in taxable or non-taxable?

Is it random?

Is it how long you intend to hold them?

My question particularly is around $WM, $BEP and $BRK.B, three holdings I wish to independently own.

Re: Those who buy SOME individual stocks, where do you put them?

Posted: Mon Nov 04, 2019 11:01 pm
by nedsaid
I own 18 individual stocks in an IRA Brokerage Account and 4 in DRIP plans. My preferred holding period is. . .well. . .forever. I don't like to sell but will sell if future prospects for the company dim. Even for me there is a certain amount of monitoring and maintenance for a stock portfolio, hopefully not very much. My first stock investment was in Twentieth Century (now American Century) Select Fund first purchased on July 16, 1984. My first stock, AST research was purchased in 1988 after I moved a bank CD IRA to a brokerage firm after a friend went into the brokerage business as a stock broker. So I have owned both mutual funds and individual stocks since. In early 2000, individual stocks were 45% of my retirement portfolio, now they are 13%.

Re: Those who buy SOME individual stocks, where do you put them?

Posted: Mon Nov 04, 2019 11:47 pm
by Small Savanna
I have some individual stocks in my taxable brokerage account. One of the possible benefits of individual stocks is that you control the timing of capital gains and losses. That benefit is only meaningful in a taxable account.

Re: Those who buy SOME individual stocks, where do you put them?

Posted: Mon Nov 04, 2019 11:51 pm
by Prettyfrtnt
Taxable... brokerage...

Re: Those who buy SOME individual stocks, where do you put them?

Posted: Mon Nov 04, 2019 11:51 pm
by manlymatt83
Small Savanna wrote: Mon Nov 04, 2019 11:47 pm I have some individual stocks in my taxable brokerage account. One of the possible benefits of individual stocks is that you control the timing of capital gains and losses. That benefit is only meaningful in a taxable account.
Ah! Interesting. So none in your tax advantaged?

Re: Those who buy SOME individual stocks, where do you put them?

Posted: Tue Nov 05, 2019 12:04 am
by dual
Given the preferential tax treatment of dividends and long term capital gains, I hold them in a taxable account.

Re: Those who buy SOME individual stocks, where do you put them?

Posted: Tue Nov 05, 2019 12:15 am
by Grt2bOutdoors
Taxable, if you bet wrong at least you can write off loss on income tax, losing in a retirement account you lose twice, once on loss and once with inability to reduce your current taxable income.

Re: Those who buy SOME individual stocks, where do you put them?

Posted: Tue Nov 05, 2019 12:23 am
by White Coat Investor
mjuszczak wrote: Mon Nov 04, 2019 10:21 pm Those who buy SOME individual stocks (as 5% - 10% of your overall holdings, etc.)... . How do you determine whether to put them in taxable or non-taxable?

Is it random?

Is it how long you intend to hold them?

My question particularly is around $WM, $BEP and $BRK.B, three holdings I wish to independently own.
Put the ones that don't pay dividends in taxable assuming you're buying and holding forever. If the yield is significant or if you plan on trading much, put it in a tax protected account.

Re: Those who buy SOME individual stocks, where do you put them?

Posted: Tue Nov 05, 2019 7:00 am
by Small Savanna
mjuszczak wrote: Mon Nov 04, 2019 11:51 pm
Small Savanna wrote: Mon Nov 04, 2019 11:47 pm I have some individual stocks in my taxable brokerage account. One of the possible benefits of individual stocks is that you control the timing of capital gains and losses. That benefit is only meaningful in a taxable account.
Ah! Interesting. So none in your tax advantaged?
My tax advantaged accounts follow the Boglehead mantra - bond funds and stock index funds. And I'm gradually moving away from individual stocks in my taxable account too. I've made a few lucky bets, but I'm no longer convinced I can beat the market.

Re: Those who buy SOME individual stocks, where do you put them?

Posted: Tue Nov 05, 2019 7:47 am
by TNWoods
Before I found this forum I had an old IRA that was managed by a guy at Morgan Stanley. I took the account over and it is still in individual stocks. YTD it is up 34%, so I'm still letting it ride. Long term it is also better than market, especially now that I'm not paying those AUM fees. I don't trade much, I tend to hold pretty long, let dividends accumulate, then buy and hold again.

I also did a cash-out refi of my home back in early-mid 2008, and used a portion of that money to open a taxable account (then at ScotTrade) and began buying individual stocks in November of 2008. Which was about the best market timing you could fall into, assuming you picked the companies that would survive and return to their former state.

Even after becoming familiar with this site I have kept that account intact, as the performance has been better than the market consistently. I tend to buy and hold for a long time because I don't buy until I have done a ton of research and decide what I am buying is a good long term entity. (Only 32 "buys" or "sells" in the last 11 years....) I have been absolutely wrong about a couple decisions, but the ones where I was right are very right. YTD for this account is over 50%...so I'm letting it ride too.

Together these are well above the recommended 5% of my portfolio, but I'm ok with that and with them.

So some in a rollover IRA, some in a taxable account.

TNWoods

Re: Those who buy SOME individual stocks, where do you put them?

Posted: Tue Nov 05, 2019 8:41 am
by Target2019
mjuszczak wrote: Mon Nov 04, 2019 10:21 pm Those who buy SOME individual stocks (as 5% - 10% of your overall holdings, etc.)... . How do you determine whether to put them in taxable or non-taxable?

Is it random?

Is it how long you intend to hold them?

My question particularly is around $WM, $BEP and $BRK.B, three holdings I wish to independently own.
15% of total portfolio is individual stocks and a few ETFs. This is held in taxable brokerage. Intent is to hold forever.

Re: Those who buy SOME individual stocks, where do you put them?

Posted: Tue Nov 05, 2019 8:48 am
by aristotelian
Taxable. Allows harvesting of losses and encourages buy and hold rather than day trading.

Re: Those who buy SOME individual stocks, where do you put them?

Posted: Tue Nov 05, 2019 9:10 am
by lazyday
A plus to using tax advantaged: probably less tax paperwork/data entry, and potentially easier tax planning such as estimating dividends.

But with some care over the years, taxable can be better overall. Tax loss harvesting, step up in basis on death, and gifting highly appreciated shares to charity. Those work with funds too, but there's generally more potential with individual stocks since there's more variation in returns.