Help Converting Existing Portfolio to 3-Fund

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Help Converting Existing Portfolio to 3-Fund

Post by immediateconvert »

Please see Post 3 for current account details and questions!
Last edited by immediateconvert on Wed Jul 21, 2021 3:31 pm, edited 1 time in total.
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Re: Help Converting Existing Portfolio to 3-Fund

Post by tashnewbie »

Welcome to the forum.

Some more information will be necessary to provide advice about potential tax implications of selling in your taxable brokerage account. What are your federal and state marginal tax brackets and capital gains tax bracket (0%, 15%, or 20%)?

Good news is there are no tax consequences to selling funds in the Roth IRAs.

In both Roth IRAs, I would consolidate every holding into something like FSKAX (Fidelity's Total Stock Market index fund) or FZROX (Fidelity's Zero TSM index fund; this one has a 0% expense ratio).

Others with more knowledge can offer advice about how to unwind the taxable account. It may need to be done over several years to be as tax-efficient as reasonably possible. A good starting point would to be to determine the UNrealized gains/losses in each holding. Add that information to your original post so that it's easily viewable by other forum members.

Check out this wiki about tax-efficient fund placement: ... _placement. General idea is that broad market stock index funds are good in all types of accounts and best to put bonds in tax-deferred accounts like traditional 401k/IRA (this depends on your tax brackets; for some higher income earners, it makes sense to put muni bonds in taxable; given current low bond yield environment, it doesn't really matter if you put total bond funds in taxable).

A 5% allocation to international stocks or bonds probably won't make much difference in your portfolio, in terms of diversification. I wouldn't bother with anything less than 10% to each of those assets.
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Help Transitioning to 3-Fund Portfolio

Post by immediateconvert »

[Thread merged into here --admin LadyGeek]

Emergency funds: Yes

Debt: $528k mortgage at 2.5% with 30 years remaining (30-year-fixed, no PMI).

Tax Filing Status: Married Filing Jointly + 1 Dependent

Tax Rate: 6% Federal, 15% State due to deductions

State of Residence: CA

Age: 39

Desired Asset allocation: 95% stocks / 5% bonds
Desired International allocation: 10% of stocks

Portfolio Size: $730k

Current retirement assets

20.48% cash in Fidelity Cash Reserves (FDRXX) (0.26%) - core account
28.31% Fidelity Tax-Free Bond (FTABX)(0.25%)
2.66% Exxon Mobil (XOM)
2.21% Eversource Energy (ES)
2.18% Fidelity 500 Index Fund (FXAIX)(0.015%)
1.25% Exelon Corp (EXC)
1.18% Comcast (CMCSA)
1.17% AT&T (T)
0.45% Skyworks Solutions (SKWS)
0.44% Apple Inc (AAPL)
0.39% Kroger (KR )
0.39% Conoco Phillips (COP)
0.25% Phillips 66 (PSX)
0.01% Fidelity CA Municipal Money Market (FCFXX)(0.25%)

His 401k
7% Vanguard Institutional Index Fund Institutional Shares (VINIX)(0.04%)"

His Roth IRA at Fidelity/b]
5.26% Fidelity 500 Index Fund (FXAIX)(0.015%)
2.7% Fidelity Mid Cap Index Fund (FSMDX)(0.025%)
2.6% Disney (DIS)()
2.55% Fidelity Small Cap Index Fund (FSSNX)(0.025%)
1.54% Pfizer (PFE)()
1.52% Fidelity Total Intl Index Fund (FTIHX)(0.06%)
1.26% Fidelity Total Market Index Fund (FSKAX)(0.015%)
0.06% Viatris Inc (VTRS)()
0.001% Government Cash Reserves (FDRXX)(0.26%)

Her Roth IRA at Fidelity
4.85% Fidelity 500 Index Fund (FXAIX)(0.015%)
2.91% Fidelity Extended Market Index Fund (FSMAX)(0.035%)
0.93% Fidelity International Index Fund (FSPSX)(0.035%)
0.12% Fidelity Select Medical Technology Index Fund (FSMEX)(0.7%)

Her Employer Retirement Account
5.48% in employer account as part of UCRP Univ of CA retirement. Contributes 8% of gross wages. Have to research if this is required.


New annual Contributions
$19,500 his 401k into Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) (0.04%) (partial year given multiple jobs this year)
$xx her 403b (also specify any employer matching contributions)

Available funds in his 401(k) moving forward (new annual contribution)

Funds available in her employer-managed account via Univ of CA
Not available - managed by university. Can Google UCRP fund.

1. How and where do I reallocate for the best tax advantage given accounts we have and retirement age?
2. Do I hold my stocks since some I've had so long I don't even have cost bases? Or just take the tax hit?
3. Do we consider backdooring into our Roth IRAs?
4. Do I do anything else with my existing 401(k)?
5. Do we consider a Roth Conversion?
6. Do I need an accountant?
7. What other recommendations are recommended on a go-forward basis assuming I am going to get advice to do a 3-fund across accounts?
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Re: Help Converting Existing Portfolio to 3-Fund

Post by LadyGeek »

immediateconvert, Welcome! In order to provide appropriate advice, it's best to keep all the information in one spot. I merged your update back into the original thread.

If you have any questions, ask them here. (This isn't a big deal, don't worry about it.)
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
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Re: Help Converting Existing Portfolio to 3-Fund

Post by immediateconvert »

Sorry, and thanks! I noticed my thread was removed, I'll assume due to not following formatting instructions! Saw that after the fact.

24% federal and 9.3% state for marginal tax brackets.
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