Advice needed. How to convert $1.2 million portfolio

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Topic Author
Stefano
Posts: 15
Joined: Mon Apr 01, 2024 2:07 pm

Advice needed. How to convert $1.2 million portfolio

Post by Stefano »

[Topic title reformatted to remove posting in all capital letters - moderator ClaycordJCA]

I hope this message finds you all doing well. I've been a long-time lurker here, soaking up the wisdom shared in this wonderful community. Today, I'm reaching out with a mix of excitement and nervousness as I share my story and seek your genuine advice.

Recently, something quite unexpected happened—I hit the jackpot. Three of my investments turned out to be huge winners, leaving me with about 1.2 million dollars in gains. It's a surreal feeling, to say the least and I'm extremely blessed. But along with the excitement comes a wave of uncertainty.

You see, I've been thinking a lot about my future, especially now that my investments have grown so significantly. I spend a big chunk of my day stressing over my stocks, trying to keep up with every news article and market fluctuation. It's exhausting, and it's taking away from the joy of living life.

I've always admired the Boglehead philosophy—simple, straightforward, and focused on the long term. And I've made a decision: I want to embrace it fully. I want to move away from the high-risk game and instead build a rock-steady portfolio, centered around VTI with a good chunk of cash on hand for stability.

I wanted to mention that I'm a 23-year-old single dad. My son is my world, and securing our future is my top priority. I want to make sure we're protected, regardless of the storm. I'm in a head of household tax bracket, and all of the gains are long-term. Currently, I only make a salary of about $30,000 and I'm working towards a job in programming. My current portfolio provides almost zero monthly income and is causing me a lot of stress. Even though these three stocks are among the best, or perhaps the absolute best there is, I still cannot find peace in them.

Here's where I could use your help: Should I take the plunge and make the transition all at once, despite the tax implications, or should I ease into it gradually? By selling shares straight up or doing covered calls somewhat near the money. I'm set on allocating most of my portfolio to VTI with a bit set aside for emergencies. Maybe a touch of BND.

So, dear Bogleheads, I'm turning to you for advice. Your insights, your stories, your wisdom—they all mean the world to me. Thank you for taking the time to read this and may you all be blessed with prosperous financial journeys and peace of mind. https://imgur.com/gallery/zTVa5OU
niagara_guy
Posts: 1181
Joined: Tue Feb 11, 2020 7:32 am

Re: ADVICE NEEDED. HOW TO CONVERT $1.2 MILLION PORTFOLIO

Post by niagara_guy »

I would use 2023 tax software to model your taxes for 2024 (probably close enough) to determine how much in taxes you will pay for various amounts sold.

Here is a link to the LTCG rates for 2024:

https://www.kiplinger.com/taxes/capital ... -tax-rates

it looks like you can sell a bunch of this stock and stay in the 15% LTCG rate, I would consider doing that.

However, sometimes stocks crash so you will want to take that into consideration when deciding when to sell. If it's keeping you up at night you may want to sell sooner rather than later.
Parkinglotracer
Posts: 4057
Joined: Fri Dec 20, 2019 2:49 am
Location: Upstate NY

Re: ADVICE NEEDED. HOW TO CONVERT $1.2 MILLION PORTFOLIO

Post by Parkinglotracer »

If you don’t want to sell all your gains in one year because of the tax bill someone smarter than me here could help you with a strategy to use options to lock in your gains until you can sell them in future years. I’d keep 100 shares of nvidia.
Topic Author
Stefano
Posts: 15
Joined: Mon Apr 01, 2024 2:07 pm

Re: ADVICE NEEDED. HOW TO CONVERT $1.2 MILLION PORTFOLIO

Post by Stefano »

Parkinglotracer wrote: Mon Apr 01, 2024 7:56 pm If you don’t want to sell all your gains in one year because of the tax bill someone smarter than me here could help you with a strategy to use options to lock in your gains until you can sell them in future years. I’d keep 100 shares of nvidia.
Why would you keep 100 shares of nvidia?
Topic Author
Stefano
Posts: 15
Joined: Mon Apr 01, 2024 2:07 pm

Re: ADVICE NEEDED. HOW TO CONVERT $1.2 MILLION PORTFOLIO

Post by Stefano »

niagara_guy wrote: Mon Apr 01, 2024 7:39 pm I would use 2023 tax software to model your taxes for 2024 (probably close enough) to determine how much in taxes you will pay for various amounts sold.

Here is a link to the LTCG rates for 2024:

https://www.kiplinger.com/taxes/capital ... -tax-rates

it looks like you can sell a bunch of this stock and stay in the 15% LTCG rate, I would consider doing that.

However, sometimes stocks crash so you will want to take that into consideration when deciding when to sell. If it's keeping you up at night you may want to sell sooner rather than later.
Only sell into the 15% LTCG and hold out till next year to fully be swapped out of the individual stocks?
LFKB
Posts: 1302
Joined: Mon Dec 24, 2012 6:06 pm

Re: ADVICE NEEDED. HOW TO CONVERT $1.2 MILLION PORTFOLIO

Post by LFKB »

What are the stocks? NVDA, SMCI and something else?

How much are your unrealized capital gains?

I’d probably sell up to the 15% capital gains tax rate threshold immediately and then use calls and putts to hedge price fluctuations on most all of the remaining shares.

I can’t tell you how much risk to take but if it were me I would be at least 80% stocks at your young age.

Congrats and good luck.
Topic Author
Stefano
Posts: 15
Joined: Mon Apr 01, 2024 2:07 pm

Re: ADVICE NEEDED. HOW TO CONVERT $1.2 MILLION PORTFOLIO

Post by Stefano »

LFKB wrote: Mon Apr 01, 2024 9:39 pm What are the stocks? NVDA, SMCI and something else?

How much are your unrealized capital gains?

I’d probably sell up to the 15% capital gains tax rate threshold immediately and then use calls and putts to hedge price fluctuations on most all of the remaining shares.

I can’t tell you how much risk to take but if it were me I would be at least 80% stocks at your young age.

Congrats and good luck.
NVIDIA AMD AAPL. Unrealized 1.2 million in gains. 612k Nvida 474k aapl 124k amd
Lookingforanswers
Posts: 161
Joined: Sun May 06, 2018 4:39 pm

Re: Advice needed. How to convert $1.2 million portfolio

Post by Lookingforanswers »

Congrats. I appreciate the fact that it's stressful to sit on these big gains but also also stressful to think about cashing in.

Given your stage in life, your income and your parental obligations, if it were me I'd consider selling off 50% of the stock right now and then moderately selling off the rest over the next few years. Even though selling off 50% now gives you a big tax hit this year, it gives you enough money to create a nice emergency fund in cash and short-term bonds, while also putting several years of your current salary into diversified index funds. I think you'll feel better after liquidating a significant chunk. If it's too stressful to do at once, do it in 2 or 3 transactions over the next few months.

Then, starting next year, I'd make a goal to get rid of 25% of this concentrated position each year over the next few years. Just take out 25% of year January balance each year, and you'll gradually carve away at the total.

I wouldn't get rid of it all, by the way - I'd keep $20,000 in each stock as a souvenir of your great investing decisions. Congrats again!
Topic Author
Stefano
Posts: 15
Joined: Mon Apr 01, 2024 2:07 pm

Re: Advice needed. How to convert $1.2 million portfolio

Post by Stefano »

Lookingforanswers wrote: Mon Apr 01, 2024 11:55 pm Congrats. I appreciate the fact that it's stressful to sit on these big gains but also also stressful to think about cashing in.

Given your stage in life, your income and your parental obligations, if it were me I'd consider selling off 50% of the stock right now and then moderately selling off the rest over the next few years. Even though selling off 50% now gives you a big tax hit this year, it gives you enough money to create a nice emergency fund in cash and short-term bonds, while also putting several years of your current salary into diversified index funds. I think you'll feel better after liquidating a significant chunk. If it's too stressful to do at once, do it in 2 or 3 transactions over the next few months.

Then, starting next year, I'd make a goal to get rid of 25% of this concentrated position each year over the next few years. Just take out 25% of year January balance each year, and you'll gradually carve away at the total.

I wouldn't get rid of it all, by the way - I'd keep $20,000 in each stock as a souvenir of your great investing decisions. Congrats again!
Thank you for the advice and the congratulations. I wish you the best!
Parkinglotracer
Posts: 4057
Joined: Fri Dec 20, 2019 2:49 am
Location: Upstate NY

Re: ADVICE NEEDED. HOW TO CONVERT $1.2 MILLION PORTFOLIO

Post by Parkinglotracer »

Stefano wrote: Mon Apr 01, 2024 9:32 pm
Parkinglotracer wrote: Mon Apr 01, 2024 7:56 pm If you don’t want to sell all your gains in one year because of the tax bill someone smarter than me here could help you with a strategy to use options to lock in your gains until you can sell them in future years. I’d keep 100 shares of nvidia.
Why would you keep 100 shares of nvidia?
All the same reasons it has gone up so much to date. Their CEO’s vision, the future of AI, the industry leading full stack of hous and products they have, their increasing product margins, their increasing sales, their low PE even with its run to 900. Probably the same reason you have it.

I agree with your decision to diversify your portfolio.


I have a few shares - 2% of my portfolio. Overall I have about 15% of my investments in individual stocks. The rest is in a 3 fund portfolio with a 5 year treasury ladder for my fixed income. My stocks have averaged about 2x the average gain of VTI the last 10 years but I realize that the individual stocks are riskier and VTI owns them too so I am working to decrease the amount I have in stocks as is prudent for taxes.
AspirationalBH
Posts: 50
Joined: Sat Oct 01, 2022 12:08 am

Re: Advice needed. How to convert $1.2 million portfolio

Post by AspirationalBH »

You need to lay a good foundation since you have responsibilities, so here's my personal advice.

First steps (0-3 months)
1. buy term life insurance
Yes, the appreciated stocks have enough value but for extra stability, you'll know your son will be taken care of long-term.

2. Open a 2nd brokerage account
Separate your trading account from your long term investments (do not enable option trading)
For every covered call that is assigned, transfer all of it to this 2nd account

3. Create a plan for converting each assigned covered call, e.g. 30% taxes, 30% VTI, 20% BND, 10% cash
Believe me you do NOT want to be in a position where you have to sell more stocks to pay your taxes at the last minute. Options premiums are taxed as short-term capital gains.
Feel free to change allocation after you have 100k or 250k
Build up this investment base so that you can pay your life insurance premiums from this account if you disable fund(s) re-investments and other expenses

By the end of the year
* Decide on whether to open a 529 account for you son

As for how much & when, I would sell up to 500k and then decide later what to do long term. If I'm comfortable, I might leave up to a 500k and just harvest anything over 200k or 100k.

HTH
Elysium
Posts: 4161
Joined: Mon Apr 02, 2007 6:22 pm

Re: Advice needed. How to convert $1.2 million portfolio

Post by Elysium »

OP,

This is not at all complicated if you take emotions out of your investing. The gains were made, they are real as of now, successful investing also requires cashing in, waiting for too long to let tax tail wag could be costly. The best way to do is think of your total gains as a joint owned balanced between you and the IRS. With LTCG, 85% of it belongs to you, and 15% belongs to the IRS. You need to only look at your share as your gains, the rest is not yours. Fortunately, you are in a low tax bracket with your actual income, so it's not a worry to get pushed into higher bracket, whatever bracket you get pushed in the effect on your real employment income is very low, most of the taxes will be what you actually owe IRS on gains on the shares.

I suggest selling 90% of all of those stocks, and leaving 10% there. Even if that 10% underperform the market at some point in future it shouldn't matter as those are just your gains, and the 90% you made more than make up. Once you do that then just take time figuring how to invest the money. Let it stay in cash for now, with MMF yielding close to 5% there is no need to make a quick decision.
JAusten
Posts: 67
Joined: Thu May 06, 2021 4:50 pm
Location: Tuscaloosa, AL

Re: Advice needed. How to convert $1.2 million portfolio

Post by JAusten »

AspirationalBH has given you excellent advice - term life insurance and maybe even disability insurance since you do have a dependent. Your son will be taken care of with these.
Good luck,
J.Austen
Topic Author
Stefano
Posts: 15
Joined: Mon Apr 01, 2024 2:07 pm

Re: Advice needed. How to convert $1.2 million portfolio

Post by Stefano »

Elysium wrote: Tue Apr 02, 2024 1:08 pm OP,

This is not at all complicated if you take emotions out of your investing. The gains were made, they are real as of now, successful investing also requires cashing in, waiting for too long to let tax tail wag could be costly. The best way to do is think of your total gains as a joint owned balanced between you and the IRS. With LTCG, 85% of it belongs to you, and 15% belongs to the IRS. You need to only look at your share as your gains, the rest is not yours. Fortunately, you are in a low tax bracket with your actual income, so it's not a worry to get pushed into higher bracket, whatever bracket you get pushed in the effect on your real employment income is very low, most of the taxes will be what you actually owe IRS on gains on the shares.

I suggest selling 90% of all of those stocks, and leaving 10% there. Even if that 10% underperform the market at some point in future it shouldn't matter as those are just your gains, and the 90% you made more than make up. Once you do that then just take time figuring how to invest the money. Let it stay in cash for now, with MMF yielding close to 5% there is no need to make a quick decision.
Great advice! I sold 100% of all of them, and I'm going to reinvest 90% or 80% of it into VTI when the cash is settled and tradable. The remaining 20% I'll keep in a 5.25% savings FDIC account. Also, I'm keeping the tax implications in cash so I don't need to sell to pay the taxes.
Topic Author
Stefano
Posts: 15
Joined: Mon Apr 01, 2024 2:07 pm

Re: Advice needed. How to convert $1.2 million portfolio

Post by Stefano »

Stefano wrote: Mon Apr 01, 2024 2:14 pm [Topic title reformatted to remove posting in all capital letters - moderator ClaycordJCA]

I hope this message finds you all doing well. I've been a long-time lurker here, soaking up the wisdom shared in this wonderful community. Today, I'm reaching out with a mix of excitement and nervousness as I share my story and seek your genuine advice.

Recently, something quite unexpected happened—I hit the jackpot. Three of my investments turned out to be huge winners, leaving me with about 1.2 million dollars in gains. It's a surreal feeling, to say the least and I'm extremely blessed. But along with the excitement comes a wave of uncertainty.

You see, I've been thinking a lot about my future, especially now that my investments have grown so significantly. I spend a big chunk of my day stressing over my stocks, trying to keep up with every news article and market fluctuation. It's exhausting, and it's taking away from the joy of living life.

I've always admired the Boglehead philosophy—simple, straightforward, and focused on the long term. And I've made a decision: I want to embrace it fully. I want to move away from the high-risk game and instead build a rock-steady portfolio, centered around VTI with a good chunk of cash on hand for stability.

I wanted to mention that I'm a 23-year-old single dad. My son is my world, and securing our future is my top priority. I want to make sure we're protected, regardless of the storm. I'm in a head of household tax bracket, and all of the gains are long-term. Currently, I only make a salary of about $30,000 and I'm working towards a job in programming. My current portfolio provides almost zero monthly income and is causing me a lot of stress. Even though these three stocks are among the best, or perhaps the absolute best there is, I still cannot find peace in them.

Here's where I could use your help: Should I take the plunge and make the transition all at once, despite the tax implications, or should I ease into it gradually? By selling shares straight up or doing covered calls somewhat near the money. I'm set on allocating most of my portfolio to VTI with a bit set aside for emergencies. Maybe a touch of BND.

So, dear Bogleheads, I'm turning to you for advice. Your insights, your stories, your wisdom—they all mean the world to me. Thank you for taking the time to read this and may you all be blessed with prosperous financial journeys and peace of mind. https://imgur.com/gallery/zTVa5OU
EDIT TO MY ORIGINAL POST not sure how to edit the post so i'm replying to myself.
Edit: Thank you all so much for the responses. I decided to realize all the gains. I’m waiting for the settlement of the funds and will set cash for the tax implications as-well as a large emergency fund. The rest will be going into VTI and I’ll be staying the course or the rest of life. The peace of mind and serenity knowing me and my son can weather the storm is rock solid and priceless. Bless all of you I wish you the best!
Topic Author
Stefano
Posts: 15
Joined: Mon Apr 01, 2024 2:07 pm

Re: Advice needed. How to convert $1.2 million portfolio

Post by Stefano »

JAusten wrote: Tue Apr 02, 2024 1:44 pm AspirationalBH has given you excellent advice - term life insurance and maybe even disability insurance since you do have a dependent. Your son will be taken care of with these.
Good luck,
J.Austen
I have whole life insurance plan with new york life and it comes with disability insurance. Payout is half a million thank you for the great advice.
Topic Author
Stefano
Posts: 15
Joined: Mon Apr 01, 2024 2:07 pm

Re: Advice needed. How to convert $1.2 million portfolio

Post by Stefano »

AspirationalBH wrote: Tue Apr 02, 2024 9:53 am You need to lay a good foundation since you have responsibilities, so here's my personal advice.

First steps (0-3 months)
1. buy term life insurance
Yes, the appreciated stocks have enough value but for extra stability, you'll know your son will be taken care of long-term.

2. Open a 2nd brokerage account
Separate your trading account from your long term investments (do not enable option trading)
For every covered call that is assigned, transfer all of it to this 2nd account

3. Create a plan for converting each assigned covered call, e.g. 30% taxes, 30% VTI, 20% BND, 10% cash
Believe me you do NOT want to be in a position where you have to sell more stocks to pay your taxes at the last minute. Options premiums are taxed as short-term capital gains.
Feel free to change allocation after you have 100k or 250k
Build up this investment base so that you can pay your life insurance premiums from this account if you disable fund(s) re-investments and other expenses

By the end of the year
* Decide on whether to open a 529 account for you son

As for how much & when, I would sell up to 500k and then decide later what to do long term. If I'm comfortable, I might leave up to a 500k and just harvest anything over 200k or 100k.

HTH
Great idea on the second account, If I ever want to get entertainment from trading I'll make sure to keep it separate and not margin at all. Also ill disable that on the main account
TigerJulie
Posts: 6
Joined: Sun Jun 28, 2020 10:39 am

Re: Advice needed. How to convert $1.2 million portfolio

Post by TigerJulie »

Fidelity has partnered with a company named NorthCoast that works with people in your situation; usually, it's employees who have a large stock position in the company for which they work. But, the stock holders need to de-risk by working down, through sales, a too-large position in a stock. Basically, it's a strategy of writing covered calls to earn cash to pay the tax on the options income and on the capital gains of the sales, and, ideally, to make some money. I think the service costs about 1% of the amount under management.

If I were you, I would contact my local Fidelity office and ask for someone familiar with the NorthCoast program. Or, I suppose you could contact NorthCoast directly. Good luck; you've got a great problem!
Xrayman69
Posts: 1028
Joined: Fri Jun 01, 2018 8:52 pm

Re: Advice needed. How to convert $1.2 million portfolio

Post by Xrayman69 »

Stefano wrote: Tue Apr 02, 2024 4:19 pm
Stefano wrote: Mon Apr 01, 2024 2:14 pm [Topic title reformatted to remove posting in all capital letters - moderator ClaycordJCA]

I hope this message finds you all doing well. I've been a long-time lurker here, soaking up the wisdom shared in this wonderful community. Today, I'm reaching out with a mix of excitement and nervousness as I share my story and seek your genuine advice.

Recently, something quite unexpected happened—I hit the jackpot. Three of my investments turned out to be huge winners, leaving me with about 1.2 million dollars in gains. It's a surreal feeling, to say the least and I'm extremely blessed. But along with the excitement comes a wave of uncertainty.

You see, I've been thinking a lot about my future, especially now that my investments have grown so significantly. I spend a big chunk of my day stressing over my stocks, trying to keep up with every news article and market fluctuation. It's exhausting, and it's taking away from the joy of living life.

I've always admired the Boglehead philosophy—simple, straightforward, and focused on the long term. And I've made a decision: I want to embrace it fully. I want to move away from the high-risk game and instead build a rock-steady portfolio, centered around VTI with a good chunk of cash on hand for stability.

I wanted to mention that I'm a 23-year-old single dad. My son is my world, and securing our future is my top priority. I want to make sure we're protected, regardless of the storm. I'm in a head of household tax bracket, and all of the gains are long-term. Currently, I only make a salary of about $30,000 and I'm working towards a job in programming. My current portfolio provides almost zero monthly income and is causing me a lot of stress. Even though these three stocks are among the best, or perhaps the absolute best there is, I still cannot find peace in them.

Here's where I could use your help: Should I take the plunge and make the transition all at once, despite the tax implications, or should I ease into it gradually? By selling shares straight up or doing covered calls somewhat near the money. I'm set on allocating most of my portfolio to VTI with a bit set aside for emergencies. Maybe a touch of BND.

So, dear Bogleheads, I'm turning to you for advice. Your insights, your stories, your wisdom—they all mean the world to me. Thank you for taking the time to read this and may you all be blessed with prosperous financial journeys and peace of mind. https://imgur.com/gallery/zTVa5OU
EDIT TO MY ORIGINAL POST not sure how to edit the post so i'm replying to myself.
Edit: Thank you all so much for the responses. I decided to realize all the gains. I’m waiting for the settlement of the funds and will set cash for the tax implications as-well as a large emergency fund. The rest will be going into VTI and I’ll be staying the course or the rest of life. The peace of mind and serenity knowing me and my son can weather the storm is rock solid and priceless. Bless all of you I wish you the best!
Very reasonable. It is only a win if you cash it in. Too many people have the tax fear and hold on to “paper gains” and then have the equity drop significantly. You only have to get rich once, and then keep and maintain. 5% on 1M in a MMF is greater than yiur current annual salary of 30K.

You are young, it’s ok to speculate on a fraction of your portfolio, while using a standard diverse broad fund/ETF and let time do its thing.
LFKB
Posts: 1302
Joined: Mon Dec 24, 2012 6:06 pm

Re: Advice needed. How to convert $1.2 million portfolio

Post by LFKB »

Elysium wrote: Tue Apr 02, 2024 1:08 pm OP,

This is not at all complicated if you take emotions out of your investing. The gains were made, they are real as of now, successful investing also requires cashing in, waiting for too long to let tax tail wag could be costly. The best way to do is think of your total gains as a joint owned balanced between you and the IRS. With LTCG, 85% of it belongs to you, and 15% belongs to the IRS. You need to only look at your share as your gains, the rest is not yours. Fortunately, you are in a low tax bracket with your actual income, so it's not a worry to get pushed into higher bracket, whatever bracket you get pushed in the effect on your real employment income is very low, most of the taxes will be what you actually owe IRS on gains on the shares.

I suggest selling 90% of all of those stocks, and leaving 10% there. Even if that 10% underperform the market at some point in future it shouldn't matter as those are just your gains, and the 90% you made more than make up. Once you do that then just take time figuring how to invest the money. Let it stay in cash for now, with MMF yielding close to 5% there is no need to make a quick decision.
Huh? Selling all the stock will push him into 20% capital gains bracket, which is why a few of us recommended selling up to the 15% level (around $519k) and using options to hedge out the exposure until next year.

EDIT: it looks like the OP went ahead and sold all their shares and decided to pay the 20% cap gain this year
HomeStretch
Posts: 11618
Joined: Thu Dec 27, 2018 2:06 pm

Re: Advice needed. How to convert $1.2 million portfolio

Post by HomeStretch »

Stefano wrote: Tue Apr 02, 2024 4:47 pm
JAusten wrote: Tue Apr 02, 2024 1:44 pm AspirationalBH has given you excellent advice - term life insurance and maybe even disability insurance since you do have a dependent. Your son will be taken care of with these.
Good luck,
J.Austen
I have whole life insurance plan with new york life and it comes with disability insurance. Payout is half a million thank you for the great advice.
Whole life policies tend to be expensive for insurance and a poor savings vehicle. Have you considered instead level premium term life policy for a 20 - 30 year term and a disability policy? Two online brokers for life insurance are selectquote.com and term4sale.com.

Congratulations on selling the stock position. I think it was a wise decision to lock in your gains and diversify. If you have available Roth space in a good workplace retirement plan or Roth IRA, consider maximizing the space and using the Taxable account for living expenses if your paycheck is too low after withholdings. The Roth account(s) will grow tax free whereas your Taxable accounts income/gains are subject to tax.

Consider making college contributions to a 529 plan. You may receive a state tax deduction for it if you are in a state with an income tax.

Are your estate plans in place - a Will (naming a guardian for your minor child), a Trust (for the minor child’s inheritance), a durable power of attorney and healthcare POA/advance directives?
Topic Author
Stefano
Posts: 15
Joined: Mon Apr 01, 2024 2:07 pm

Re: Advice needed. How to convert $1.2 million portfolio

Post by Stefano »

TigerJulie wrote: Tue Apr 02, 2024 6:08 pm Fidelity has partnered with a company named NorthCoast that works with people in your situation; usually, it's employees who have a large stock position in the company for which they work. But, the stock holders need to de-risk by working down, through sales, a too-large position in a stock. Basically, it's a strategy of writing covered calls to earn cash to pay the tax on the options income and on the capital gains of the sales, and, ideally, to make some money. I think the service costs about 1% of the amount under management.

If I were you, I would contact my local Fidelity office and ask for someone familiar with the NorthCoast program. Or, I suppose you could contact NorthCoast directly. Good luck; you've got a great problem!
Don't want to give more than the 0.03% ER to anyone. Boglehead strategy is minimize costs as they are compounding in a negative way which would result in millions lost over the 50+ years it'll be held by my Son who inherits the wealth.
Topic Author
Stefano
Posts: 15
Joined: Mon Apr 01, 2024 2:07 pm

Re: Advice needed. How to convert $1.2 million portfolio

Post by Stefano »

HomeStretch wrote: Wed Apr 03, 2024 1:32 am
Stefano wrote: Tue Apr 02, 2024 4:47 pm
JAusten wrote: Tue Apr 02, 2024 1:44 pm AspirationalBH has given you excellent advice - term life insurance and maybe even disability insurance since you do have a dependent. Your son will be taken care of with these.
Good luck,
J.Austen
I have whole life insurance plan with new york life and it comes with disability insurance. Payout is half a million thank you for the great advice.
Whole life policies tend to be expensive for insurance and a poor savings vehicle. Have you considered instead level premium term life policy for a 20 - 30 year term and a disability policy? Two online brokers for life insurance are selectquote.com and term4sale.com.

Congratulations on selling the stock position. I think it was a wise decision to lock in your gains and diversify. If you have available Roth space in a good workplace retirement plan or Roth IRA, consider maximizing the space and using the Taxable account for living expenses if your paycheck is too low after withholdings. The Roth account(s) will grow tax free whereas your Taxable accounts income/gains are subject to tax.

Consider making college contributions to a 529 plan. You may receive a state tax deduction for it if you are in a state with an income tax.

Are your estate plans in place - a Will (naming a guardian for your minor child), a Trust (for the minor child’s inheritance), a durable power of attorney and healthcare POA/advance directives?
Haven't got the will in place yet or a trust, I'll need to set those up. I have a UTMA account with him that already has 6grand in it. If he needs money for school I'll assist in the paying for it or just all of it. Thank you for the advice and the congratulations. The whole life policy at this point pays for itself with the dividends it gives so I could contribute none to it. I get what you're saying though that I could potentially just take more of the money and put it into VTI and then just get the term life which could be more efficient. I'll look into that. Wish you the best!
Topic Author
Stefano
Posts: 15
Joined: Mon Apr 01, 2024 2:07 pm

Re: Advice needed. How to convert $1.2 million portfolio

Post by Stefano »

Elysium wrote: Tue Apr 02, 2024 1:08 pm OP,

This is not at all complicated if you take emotions out of your investing. The gains were made, they are real as of now, successful investing also requires cashing in, waiting for too long to let tax tail wag could be costly. The best way to do is think of your total gains as a joint owned balanced between you and the IRS. With LTCG, 85% of it belongs to you, and 15% belongs to the IRS. You need to only look at your share as your gains, the rest is not yours. Fortunately, you are in a low tax bracket with your actual income, so it's not a worry to get pushed into higher bracket, whatever bracket you get pushed in the effect on your real employment income is very low, most of the taxes will be what you actually owe IRS on gains on the shares.

I suggest selling 90% of all of those stocks and leaving 10% there. Even if that 10% underperform the market at some point in future it shouldn't matter as those are just your gains, and the 90% you made more than make up. Once you do that than just take time figuring how to invest the money. Let it stay in cash for now, with MMF yielding close to 5% there is no need to make a quick decision.
I appreciate your advice, I decided to cash it all in. Once I redeploy into VTI it'll still have about 56K in apple and 50k in nvidia based on the percentage they take of the index so I figured I'd just do all and keep it simple. Definitely think you're right about sitting on some of the Cash. I'm going to probably keep 20% cash and deploy about 80% back into VTI. Additionally, I'll keep the money to pay the taxes also in the FDIC insured upto 2.25 Million at 5.25%
HomeStretch
Posts: 11618
Joined: Thu Dec 27, 2018 2:06 pm

Re: Advice needed. How to convert $1.2 million portfolio

Post by HomeStretch »

Stefano wrote: Wed Apr 03, 2024 3:09 pm
HomeStretch wrote: Wed Apr 03, 2024 1:32 am … Are your estate plans in place - a Will (naming a guardian for your minor child), a Trust (for the minor child’s inheritance), a durable power of attorney and healthcare POA/advance directives?
… Haven't got the will in place yet or a trust, I'll need to set those up. …
Consult with a good trust and estate attorney in your state as it is important to name your minor child’s guardian and protect their inheritance in trust in the event of your death. The POAs protect you (and your minor child) in case you are incapacitated. You need back-up as a single parent! The attorney should also review any account and insurance beneficiary designations to make sure they are up-to-date and in sync with your estate plans.
dorster
Posts: 316
Joined: Tue Aug 15, 2017 4:20 pm

Re: Advice needed. How to convert $1.2 million portfolio

Post by dorster »

Stefano wrote: Wed Apr 03, 2024 3:09 pm The whole life policy at this point pays for itself with the dividends it gives so I could contribute none to it.
I think you made a good decision to deconcentrate your portfolio.

Once the dust has settled I suggest you make another post to the board describing the Whole Life Policy. I suspect it's in your interest to get out of the policy and separate your investing from your insurance, but people more familiar with them will be able to give better advice.
Topic Author
Stefano
Posts: 15
Joined: Mon Apr 01, 2024 2:07 pm

Re: Advice needed. How to convert $1.2 million portfolio

Post by Stefano »

HomeStretch wrote: Wed Apr 03, 2024 3:32 pm
Stefano wrote: Wed Apr 03, 2024 3:09 pm
HomeStretch wrote: Wed Apr 03, 2024 1:32 am … Are your estate plans in place - a Will (naming a guardian for your minor child), a Trust (for the minor child’s inheritance), a durable power of attorney and healthcare POA/advance directives?
… Haven't got the will in place yet or a trust, I'll need to set those up. …
Consult with a good trust and estate attorney in your state as it is important to name your minor child’s guardian and protect their inheritance in trust in the event of your death. The POAs protect you (and your minor child) in case you are incapacitated. You need back-up as a single parent! The attorney should also review any account and insurance beneficiary designations to make sure they are up-to-date and in sync with your estate plans.
Thank you I will look into this any links or anything you'd recommend I'm very new to these things going to need to educate myself on it.
Topic Author
Stefano
Posts: 15
Joined: Mon Apr 01, 2024 2:07 pm

Re: Advice needed. How to convert $1.2 million portfolio

Post by Stefano »

dorster wrote: Wed Apr 03, 2024 4:01 pm
Stefano wrote: Wed Apr 03, 2024 3:09 pm The whole life policy at this point pays for itself with the dividends it gives so I could contribute none to it.
I think you made a good decision to deconcentrate your portfolio.

Once the dust has settled I suggest you make another post to the board describing the Whole Life Policy. I suspect it's in your interest to get out of the policy and separate your investing from your insurance, but people more familiar with them will be able to give better advice.
Sounds good I'll look into it as soon as I can.
LFKB
Posts: 1302
Joined: Mon Dec 24, 2012 6:06 pm

Re: Advice needed. How to convert $1.2 million portfolio

Post by LFKB »

Stefano wrote: Wed Apr 03, 2024 3:16 pm
Elysium wrote: Tue Apr 02, 2024 1:08 pm OP,

This is not at all complicated if you take emotions out of your investing. The gains were made, they are real as of now, successful investing also requires cashing in, waiting for too long to let tax tail wag could be costly. The best way to do is think of your total gains as a joint owned balanced between you and the IRS. With LTCG, 85% of it belongs to you, and 15% belongs to the IRS. You need to only look at your share as your gains, the rest is not yours. Fortunately, you are in a low tax bracket with your actual income, so it's not a worry to get pushed into higher bracket, whatever bracket you get pushed in the effect on your real employment income is very low, most of the taxes will be what you actually owe IRS on gains on the shares.

I suggest selling 90% of all of those stocks and leaving 10% there. Even if that 10% underperform the market at some point in future it shouldn't matter as those are just your gains, and the 90% you made more than make up. Once you do that than just take time figuring how to invest the money. Let it stay in cash for now, with MMF yielding close to 5% there is no need to make a quick decision.
I appreciate your advice, I decided to cash it all in. Once I redeploy into VTI it'll still have about 56K in apple and 50k in nvidia based on the percentage they take of the index so I figured I'd just do all and keep it simple. Definitely think you're right about sitting on some of the Cash. I'm going to probably keep 20% cash and deploy about 80% back into VTI. Additionally, I'll keep the money to pay the taxes also in the FDIC insured upto 2.25 Million at 5.25%
I think that based on how much you sold you are going to owe 20% cap gains plus any state taxes that may be applicable. Is that the amount you set aside for taxes?
Topic Author
Stefano
Posts: 15
Joined: Mon Apr 01, 2024 2:07 pm

Re: Advice needed. How to convert $1.2 million portfolio

Post by Stefano »

LFKB wrote: Thu Apr 04, 2024 8:30 am
Stefano wrote: Wed Apr 03, 2024 3:16 pm
Elysium wrote: Tue Apr 02, 2024 1:08 pm OP,

This is not at all complicated if you take emotions out of your investing. The gains were made, they are real as of now, successful investing also requires cashing in, waiting for too long to let tax tail wag could be costly. The best way to do is think of your total gains as a joint owned balanced between you and the IRS. With LTCG, 85% of it belongs to you, and 15% belongs to the IRS. You need to only look at your share as your gains, the rest is not yours. Fortunately, you are in a low tax bracket with your actual income, so it's not a worry to get pushed into higher bracket, whatever bracket you get pushed in the effect on your real employment income is very low, most of the taxes will be what you actually owe IRS on gains on the shares.

I suggest selling 90% of all of those stocks and leaving 10% there. Even if that 10% underperform the market at some point in future it shouldn't matter as those are just your gains, and the 90% you made more than make up. Once you do that than just take time figuring how to invest the money. Let it stay in cash for now, with MMF yielding close to 5% there is no need to make a quick decision.
I appreciate your advice, I decided to cash it all in. Once I redeploy into VTI it'll still have about 56K in apple and 50k in nvidia based on the percentage they take of the index so I figured I'd just do all and keep it simple. Definitely think you're right about sitting on some of the Cash. I'm going to probably keep 20% cash and deploy about 80% back into VTI. Additionally, I'll keep the money to pay the taxes also in the FDIC insured upto 2.25 Million at 5.25%
I think that based on how much you sold you are going to owe 20% cap gains plus any state taxes that may be applicable. Is that the amount you set aside for taxes?
I'm going to set $400,000 aside. I just did $1,200,000 * 25% = $300,000 and I added $100,000 just to be safe.
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Taylor Larimore
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Location: Miami FL

Re: Advice needed. How to convert $1.2 million portfolio

Post by Taylor Larimore »

Stefano:

In my opinion you need the advice of a good accountant.

Consider the many benefits of The Three-Fund Portfolio.

Best wishes
Taylor
Jack Bogle's Words of Wisdom: "The Three-Fund Portfolio will help you to develop a sound asset allocation strategy, make smart investment selections, and guide the implementation of your plan."
"Simplicity is the master key to financial success." -- Jack Bogle
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