So I fired my financial advisor …

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Topic Author
coffeeandcats
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So I fired my financial advisor …

Post by coffeeandcats »

… but now I have a portfolio of 38 stocks in a taxable brokerage account. I’m 39 years old.

They’re mostly large cap value and growth. The person I was using was very into dividends creating an income stream which I’ve come to learn is a mixed bag in a taxable brokerage account.

I’ve done a lot of thinking about how to sell some of these off and get the money into a three fund/ETF portfolio. But the issue is capital gains taxes (mostly long term). I have some tax losses harvested so I can sell a fair bit but I’m struggling with the possibility of

1. Sell all the stocks, suck it up and pay taxes on the capital gains and then put all that money into a three fund portfolio and let it sit.

OR

2. Sell some of the stocks and reinvest that money in a three fund portfolio. Hang onto ~10, always reinvest those dividends in funds and … pray.

I suppose I could calculate the loss in money to capital gains taxes in scenario 1 vs how much that money will grow. I almost wonder if scenarios 1 and 2 will be the same in the end except scenario 1 is less stressful because of course I can’t time the market or pick which stocks are best.

Anyone got any brilliant ideas how to sell off these stocks while mitigating the tax impact?
bombcar
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Re: So I fired my financial advisor …

Post by bombcar »

Work out the total dollar amount of the taxes if you liquidated everything and reallocated.

It may be less than you fear.
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Wiggums
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Re: So I fired my financial advisor …

Post by Wiggums »

It’s ok to sell the individual stocks over several years if necessary.
"I started with nothing and I still have most of it left."
lunch_money
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Re: So I fired my financial advisor …

Post by lunch_money »

Agree that if it’s long term gains, the bill can be smaller than you might think (I did this last year and for me it really didn’t wildly increase my tax bill - covered it with extra withholding. Depends on how much stock you have to sell though).

If it’s short term but with a significant gain, I’d consider holding until they become long term.
CFM300
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Re: So I fired my financial advisor …

Post by CFM300 »

aliradler wrote: Wed Jun 05, 2024 8:14 pm … but now I have a portfolio of 38 stocks in a taxable brokerage account. They’re mostly large cap value and growth.
Are the stocks well-known companies and diversified across sectors? What's the composite dividend payout and how does that compare to Vanguard's Total Stock Market? What percentage of the dividends are qualified?

If the capital gains taxes turn out to be significant, then perhaps you could just hold on to the stocks, and even add some additional to create a sufficiently diversified portfolio. Like people did in the old days. Maybe add Vanguard's Extended Market Index fund to bring closer in line with the total market.
Last edited by CFM300 on Wed Jun 05, 2024 9:00 pm, edited 1 time in total.
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Clever_Username
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Re: So I fired my financial advisor …

Post by Clever_Username »

Among other things, ensure that the dividends are not set to reinvest -- take those in cash, which you can reinvest into your preferred new fund(s).
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tibbitts
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Re: So I fired my financial advisor …

Post by tibbitts »

You might want to just list the stocks and percentage of each so people can comment on them.
mbouck
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Re: So I fired my financial advisor …

Post by mbouck »

I wouldn't rush to sell everything. There's nothing inherently wrong with holding individual stocks as long as they are quality companies and the allocation amounts aren't large enough to jeopardize the entire portfolio if a given stock tanks/underperforms. Practically speaking, however, you'd be better off getting something like SCHD if you want to still pursue a dividend strategy vs. having to manage all the individual stocks (i.e. SCHD does this for you). The tradeoff is, however, you can make significantly more income return by holding the individual stocks vs. a dividend fund. So there isn't a free lunch here: on one hand you have the potential of higher income on the other hand you have much higher management complexity. Also - assuming a given stock is not allocated an outsized allocation amount, you can benefit even if the stock underperforms and you sell at a loss as you can claim a capital loss (to offset capital gains elsewhere). As I said - this isn't necessarily all bad.
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FiveK
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Re: So I fired my financial advisor …

Post by FiveK »

aliradler wrote: Wed Jun 05, 2024 8:14 pm Anyone got any brilliant ideas how to sell off these stocks while mitigating the tax impact?
Does the wiki article Paying a tax cost to switch funds help?
placeholder
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Re: So I fired my financial advisor …

Post by placeholder »

I agree with some of the others that if you have a reasonably diversified set you could kind of think of them as your own fund for now just redirect the dividends to other investments and look for future opportunities to reduce those positions with low tax impact.
Topic Author
coffeeandcats
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Re: So I fired my financial advisor …

Post by coffeeandcats »

Thanks all. Last post was an error. You'll see below what I have. These are pretty recognizable fortune 500 companies for the most part. Some [profanity removed - moderator oldcomputerguy] REITs and an MLP.

The issue is that of my total portfolio, this is like 75%.

One strategy would be to sell off a portion of each stock to create a "mini" fund. However my concerns with this are 1). 38 stocks does not a good fund make and 2). I do not want to nor am I capable of knowing these stocks or companies well enough to intelligently hold them. Yes, you can't time the market etc but I really can't do it. And I don't want to spend all my time doing that. Since "no one" can time the market you might say OK then just hold them for 25 years but I would wonder, might an index fund be better?

Another strategy is to sell off a portion and keep ~ 10. The ones I was thinking are:
AZN, WMT, MSFT, QCOM, XOM, LMT, GD, AVGO, DOW, MDT, NOC
But that's way more unbalanced than the initial mess ...

Just to make my goals clear: hold my positions in whatever I buy for a long time, not fuss around a lot and not micromanage.

Thank you all SO MUCH.

MSFT 10%
QCOM 6%
PG 4%
WMT 3%
AZN 3.5%
1-2% of:
AAPL
ADP
AMLP
AVGO
AZN
BCE
BHP
BMY
CAT
CCI
CVS
CVX
DOW
DUK
ETN
GD
HD
IBM
KHC
LMT
MDT
MSFT
NEE
NHI
NOC
PFE
PG
QCOM
RIO
RVT
T
TXN
UMH
UPS
VZ
WMB
WMT
XOM
BirdFood
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Re: So I fired my financial advisor …

Post by BirdFood »

I’m not sure why you would keep any of them?

Have you calculated your total gains, and taxes on those gains, if you sold them today? I think it’s important to have that number, partly to compare it to what you could lose if the values drop.
WonderWander
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Re: So I fired my financial advisor …

Post by WonderWander »

I went through a somewhat similar exercise some years ago when I decided to switch to index funds and get rid of actively managed funds and stocks.

Start off by selling stocks where you have losses or the smallest gains.

After you’ve done that, look at each stock and ask yourself if you would buy and hold it if you were investing $$ today? If not, either get rid of it now and take the tax hit, or plan to get rid of it at the next opportunity e.g start of next tax year.

I ended up selling almost all my individual stocks over 2-3 years, paid the cap gain taxes and switched to index funds. Only have a couple of stocks that I’ve had for over a decade each and feel comfortable keeping them for another 10+ years.
Topic Author
coffeeandcats
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Re: So I fired my financial advisor …

Post by coffeeandcats »

To answer BirdFood: I would keep some because of the large capital gains taxes I would face. But that's part of my question in the initial post as to whether that's a valid concern.

WonderWander: that's kind of what I was thinking. But I am stressed by things like MSFT. I mean look at what happened 1999-2000 to MSFT. And you could argue if that happened to you and then you held it for 25 years you would be at today and you'd be just fine. But look at AOL. That one didn't come back. Yes, MSFT probably won't go away but really, what do any of us know?
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whodidntante
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Re: So I fired my financial advisor …

Post by whodidntante »

Sell any lots that are down now. Look at how large your capital loss is. Then sell shares with the smallest gains until you reach zero. Then start to prefer realizing long term gains, up to your personal squeal point for the year.

Revisit next year.
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whodidntante
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Re: So I fired my financial advisor …

Post by whodidntante »

aliradler wrote: Thu Jun 06, 2024 6:39 pm To answer BirdFood: I would keep some because of the large capital gains taxes I would face. But that's part of my question in the initial post as to whether that's a valid concern.

WonderWander: that's kind of what I was thinking. But I am stressed by things like MSFT. I mean look at what happened 1999-2000 to MSFT. And you could argue if that happened to you and then you held it for 25 years you would be at today and you'd be just fine. But look at AOL. That one didn't come back. Yes, MSFT probably won't go away but really, what do any of us know?
You're mixing risk management and tax management.

From a risk management optimization standpoint, it's best to own no individual stocks. But you cannot optimize everything. You have to choose.
Topic Author
coffeeandcats
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Re: So I fired my financial advisor …

Post by coffeeandcats »

Whodidntante: you're absolutely right. And I'm struggling with that.
RetiredAL
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Re: So I fired my financial advisor …

Post by RetiredAL »

aliradler wrote: Thu Jun 06, 2024 6:54 pm Whodidntante: you're absolutely right. And I'm struggling with that.
OP -- How much ($) in CapGains do you really have. Managed accounts tend to be traded a lot, hence you may have been paying for CapGains all along the way.

When I did this to my Dad's previously managed account 6 years ago (a mix of Stocks and Funds), I ....
1) First sold anything that was a loss.
2) Next I sold all of the small fry's. They just didn't warrant spending time/effort to analyze.
-- These two steps reduced the count by 2/3rds. --
3) I then stack ranked the remaining holdings 2 year returns against the SP500, and got rid of the plus performers that were still dogs. Why hold anything that has not kept up with the SP500.
4) I then issued tight 'stop losses' to all of those remaining and rode whatever additional gains could be had. I managed the stop loss points when any rose.
5) Within weeks, all remaining remaining were sold, in part to a short lived market drop.
6) At every step, I invested the sale proceeds into SP500 holdings.
7) What had originally had looked as $25K+ in CapGains turned out to have gotten booked at around $4K.
-- In less than 60 days, the portfolio's balance was again back at a new high. --

At a 15% CapGains Tax rate, the Fed bill was tolerable. State Tax zinged another 10%.
RetiredAL
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Re: So I fired my financial advisor …

Post by RetiredAL »

aliradler wrote: Thu Jun 06, 2024 6:54 pm Whodidntante: you're absolutely right. And I'm struggling with that.
I suggest you watch the YouTube Video by Daniel Crosby on "The Behavioral Investor". Or read Daniel's Book. There are other videos/books out there with a similar theme.
Topic Author
coffeeandcats
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Re: So I fired my financial advisor …

Post by coffeeandcats »

Thank you I will get that book!

It’s more capital gains than feels wise to acquire but I think those of you who have pointed out the behavioral aspect going on here that isn’t necessarily rational are onto something.
BirdFood
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Re: So I fired my financial advisor …

Post by BirdFood »

aliradler wrote: Thu Jun 06, 2024 8:53 pm Thank you I will get that book!

It’s more capital gains than feels wise to acquire but I think those of you who have pointed out the behavioral aspect going on here that isn’t necessarily rational are onto something.
You have calculated the total tax bill, then? I can’t tell.
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NateH
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Re: So I fired my financial advisor …

Post by NateH »

at age 39, your current and future contributions will dwarf any of these tax costs. After you follow whodidntante's advice, keep 2-5 for this year and get rid of the mess. Then get rid of the rest next year, unless you want to keep 1 holding for fun.

consider yourself fortunate that you paid your advisor tuition early in life.
4X top-twenty S&P 500 prognosticator. I'd start a newsletter, but it would only have one issue per year. | dumb investor during 1999 tech bubble, current slice & dicer.
HomeStretch
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Re: So I fired my financial advisor …

Post by HomeStretch »

How much is the total unrealized gain on the 38 stocks?

Interim steps-
1. Turn off reinvestment of dividends & capital gain distributions.
2. Set your Taxable account’s cost basis method to “specific ID”. Sell any tax lots with a loss or small gain. If you have been reinvesting dividends, you likely have some tax lots with low gains.
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hand
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Re: So I fired my financial advisor …

Post by hand »

aliradler wrote: Wed Jun 05, 2024 8:14 pm
Anyone got any brilliant ideas how to sell off these stocks while mitigating the tax impact?
Mitigating tax impact really isn't the most important thing here.

I would prioritize:

1) Ensuring your taxable portfolio isn't preventing you from maximizing all tax advantaged options (HSA, 401(k), Backdoor Roth, Mega Backdoor Roth). At 39, I would happily pay cap gains on as much as needed to to move to tax advantaged.

2) Paperwork Management - MLPs seem like a huge hassle at tax time and unlikely to be worth the paperwork if they represent only a small portion of your portfolio

3) Risk Management - Having a single stock > 1-2% of your portfolio represents an uncompensated risk


That being said, in addition to the tax reduction strategy mentioned above (sell all losers and take a matching amount of gains to net to $0), consider whether you can fund any charitable giving or a charitable fund with the stocks with the biggest gains.
Money_Badger
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Re: So I fired my financial advisor …

Post by Money_Badger »

aliradler wrote: Thu Jun 06, 2024 6:10 pm Thanks all. Last post was an error. You'll see below what I have. These are pretty recognizable fortune 500 companies for the most part. Some [profanity removed - moderator oldcomputerguy] REITs and an MLP.

The issue is that of my total portfolio, this is like 75%.

One strategy would be to sell off a portion of each stock to create a "mini" fund. However my concerns with this are 1). 38 stocks does not a good fund make and 2). I do not want to nor am I capable of knowing these stocks or companies well enough to intelligently hold them. Yes, you can't time the market etc but I really can't do it. And I don't want to spend all my time doing that. Since "no one" can time the market you might say OK then just hold them for 25 years but I would wonder, might an index fund be better?

Another strategy is to sell off a portion and keep ~ 10. The ones I was thinking are:
AZN, WMT, MSFT, QCOM, XOM, LMT, GD, AVGO, DOW, MDT, NOC
But that's way more unbalanced than the initial mess ...

Just to make my goals clear: hold my positions in whatever I buy for a long time, not fuss around a lot and not micromanage.

Thank you all SO MUCH.

MSFT 10%
QCOM 6%
PG 4%
WMT 3%
AZN 3.5%
1-2% of:
AAPL
ADP
AMLP
AVGO
AZN
BCE
BHP
BMY
CAT
CCI
CVS
CVX
DOW
DUK
ETN
GD
HD
IBM
KHC
LMT
MDT
MSFT
NEE
NHI
NOC
PFE
PG
QCOM
RIO
RVT
T
TXN
UMH
UPS
VZ
WMB
WMT
XOM
That's a lot ... guessing that as a group they've outperformed though at least over the last year. It's also pretty diverse.

I would TLH what I can, definitely hold anything that is STCG, and then not be in a rush to do much else for now. As previously mentioned, turn off dividend reinvest if you haven't already done so.

At tax time, I'd start thinking about how much you can sell but still keep yourself in the same bracket. I don't think this is a "rip the bandaid off" type situation.
bombcar
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Re: So I fired my financial advisor …

Post by bombcar »

If you do the math there is NO reason not to take the LTCG tax hit now, unless you see a way to reduce that tax somehow. We can’t predict future tax rates so the only way I can see is TLH but that assumes a market loss, and why would you hold?

Or donating or passing to heirs.

So to me the diversification “insurance” is much more valuable than the 15% tax hit (unless doing it all at once throws you way too high).

STCG is high enough that the “risk” of carrying longer is probably worth it. Again, you need to work the numbers exactly - but the taxman already owns 15% of your gains, you just haven’t admitted it yet.

You could gift some stock to your children/relatives if any.
Target2019
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Re: So I fired my financial advisor …

Post by Target2019 »

aliradler wrote: Thu Jun 06, 2024 6:10 pm Thanks all. Last post was an error. You'll see below what I have. These are pretty recognizable fortune 500 companies for the most part. Some shitty REITs and an MLP.

The issue is that of my total portfolio, this is like 75%.

One strategy would be to sell off a portion of each stock to create a "mini" fund. However my concerns with this are 1). 38 stocks does not a good fund make and 2). I do not want to nor am I capable of knowing these stocks or companies well enough to intelligently hold them. Yes, you can't time the market etc but I really can't do it. And I don't want to spend all my time doing that. Since "no one" can time the market you might say OK then just hold them for 25 years but I would wonder, might an index fund be better?

Another strategy is to sell off a portion and keep ~ 10. The ones I was thinking are:
AZN, WMT, MSFT, QCOM, XOM, LMT, GD, AVGO, DOW, MDT, NOC
But that's way more unbalanced than the initial mess ...

Just to make my goals clear: hold my positions in whatever I buy for a long time, not fuss around a lot and not micromanage.

Thank you all SO MUCH.

MSFT 10%
QCOM 6%
PG 4%
WMT 3%
AZN 3.5%
1-2% of:
AAPL
ADP
AMLP
AVGO
AZN
BCE
BHP
BMY
CAT
CCI
CVS
CVX
DOW
DUK
ETN
GD
HD
IBM
KHC
LMT
MDT
MSFT
NEE
NHI
NOC
PFE
PG
QCOM
RIO
RVT
T
TXN
UMH
UPS
VZ
WMB
WMT
XOM
I would enjoy having such a portfolio, as it would fill up some of my time as I strategize, transform, and reap benefits.

I know you already see that having a dividend portfolio at 39 is not your cup of tea. You would have to pay some attention to this in the coming years.

Turn off dividend reinvestment first.

I would identify what core fund I'd like to hold in the taxable brokerage. Let's say it's VTI. Next step would be to get used to using the brokerage's account tools to get at the gains, lots, and so on. I would identify smallish groups of stocks that I could eliminate, trying to zero out gains with losses from specific lots. Then apply the proceeds to purchase core fund shares.

Personally, I detest MLP's, so maybe I would target those right away. But you do need to balance gains and losses to control cap gains taxes, right?
Topic Author
coffeeandcats
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Re: So I fired my financial advisor …

Post by coffeeandcats »

Last few posts illustrate exactly the issues here. If I just sell it all, I’ll run into much higher taxes especially given the state I live in. I already sold off losses and lots with losses. I am simply not educated enough to keep these and don’t have the time to do the due diligence. I’ll definitely be re-investing dividends but I’m wondering if it’s better to reduce down to 8-10 stocks or keep more stocks as a “mini” portfolio of this mess … as one person said, I detest MLPs (too) so that’s going regardless!
gitsy
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Re: So I fired my financial advisor …

Post by gitsy »

I'm in a similar situation -- I inherited a taxable account but with only 9 different stocks,. I sold a couple of the smaller ones with lower yield and will probably gradually sell the rest over time. Some of them have made incredible returns in the last 12 years so it is tempting to keep a few, but I'm retired and have little income now so my tax situation is much different than yours. They are mostly old-school companies with a long track record and pretty diverse in sectors (tech, consumer staples, finance, etc.)

If you're interested the thread is here: viewtopic.php?p=7898445#p7898445
yogesh
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Re: So I fired my financial advisor …

Post by yogesh »

Sell all stocks, buy VTI and chill
Emergency: FDIC | Taxable: VTI | Retirement: TD2035
BirdFood
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Re: So I fired my financial advisor …

Post by BirdFood »

aliradler wrote: Sun Jun 09, 2024 8:21 pm Last few posts illustrate exactly the issues here. If I just sell it all, I’ll run into much higher taxes especially given the state I live in.
Can you clarify what you mean by this? Of course you will pay taxes on the gains, but it sounds like you're concerned about consequences beyond that? Surely paying taxes on gains is better than waiting too long and losing those gains?

Edited to add: Is there some kind of "cliff" situation here that I'm missing? Some privilege or benefit that you will lose if your AGI is too high? Housing assistance? ACA subsidies? AMT? Are we talking about many millions of dollars?

You could lose the ability to contribute to a Roth that year, I think, but, again, that doesn't seem nearly as bad as potentially losing your gains.
Topic Author
coffeeandcats
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Re: So I fired my financial advisor …

Post by coffeeandcats »

The concern here is the increase in my state tax over a certain threshold of income.
BirdFood
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Re: So I fired my financial advisor …

Post by BirdFood »

aliradler wrote: Mon Jun 10, 2024 5:26 pm The concern here is the increase in my state tax over a certain threshold of income.
Have you calculated the total tax consequences? How much would your state tax you on the capital gains? (I assume the issue isn't an increase in tax on your earned income--that's not usually how tax brackets work.)
thedaybeforetoday
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Re: So I fired my financial advisor …

Post by thedaybeforetoday »

aliradler wrote: Mon Jun 10, 2024 5:26 pm The concern here is the increase in my state tax over a certain threshold of income.
OP: You've brought up cap gains/taxes numerous times and almost as many times, folks have asked in one way or another how much $ are we talking about here in total and in cap gains.
Perhaps I've missed the answer in reading through, but I don't see how much in cap gains you are looking at if you liquidate all and can you afford it?
Thanks
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livesoft
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Re: So I fired my financial advisor …

Post by livesoft »

What's your stand on making charitable contributions of shares that have unrealized long-term capital gains? You could engineer a tax-deduction if you itemize and not have to pay capital gains taxes.
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LilyFleur
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Re: So I fired my financial advisor …

Post by LilyFleur »

Does your state tax capital gains at the long-term-capital gains rate, or at the regular income tax rate? I live in a state that taxes them at the regular income tax rate, which is challenging.
RetiredAL
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Re: So I fired my financial advisor …

Post by RetiredAL »

aliradler wrote: Sun Jun 09, 2024 8:21 pm Last few posts illustrate exactly the issues here. If I just sell it all, I’ll run into much higher taxes especially given the state I live in. I already sold off losses and lots with losses. I am simply not educated enough to keep these and don’t have the time to do the due diligence. I’ll definitely be re-investing dividends but I’m wondering if it’s better to reduce down to 8-10 stocks or keep more stocks as a “mini” portfolio of this mess … as one person said, I detest MLPs (too) so that’s going regardless!
There is nothing wrong with the concept of spreading the selling of these CapGains over 2 or more tax years to lessen the impact, both actually and mentally, of the tax load.

If a decent "bear" happens along, that could lower the CapGains thus tax, then the rebounding "bull" could be a great opportunity. However, do not let the tail of the tax dog wag the whole dog. Prolonging a sale may result in a continuing "bull" which will increase the CapGains further.

When I took over my very elderly Dad's previously advisor managed finances, I greatly simplified most, but not all. During a significant dip I almost got to my mental selling point for his largest managed fund and it's large CapGain, then Mr Bull showed up. Not pulling the trigger, ultimately cost the estate many 10's for K$ more in fees and under-performance that what the tax at the time would have been. Trying to out-guess the market is hard and humbling. This was long before I heard/learnt of such a thing as Behavioral Finance.
Topic Author
coffeeandcats
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Re: So I fired my financial advisor …

Post by coffeeandcats »

Exactly - trying not to be guided purely by tax concerns here (but also cannot ignore them) and balance that with getting myself into a more reasonable boglehead-style portfolio.
Topic Author
coffeeandcats
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Re: So I fired my financial advisor …

Post by coffeeandcats »

To those who have asked - it's around 700k in CG's. And these stocks pay dividends which is a mixed bag in a taxable account. Would be taxed at 24%. And then in my state there is an extra tax over a certain AGI and this type of sale would cause me to enter that level. So it ends up being quite a bit in taxes. I'm trying to separate the tax part from the long-term investment part and figure out how to best "liberate" this money and put it in more sensible investments.
BirdFood
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Re: So I fired my financial advisor …

Post by BirdFood »

aliradler wrote: Mon Jun 10, 2024 6:26 pm To those who have asked - it's around 700k in CG's. And these stocks pay dividends which is a mixed bag in a taxable account. Would be taxed at 24%. And then in my state there is an extra tax over a certain AGI and this type of sale would cause me to enter that level. So it ends up being quite a bit in taxes. I'm trying to separate the tax part from the long-term investment part and figure out how to best "liberate" this money and put it in more sensible investments.
The capital gains themselves would only be taxed at 20% Federal, right? Or am I missing something?
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FiveK
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Re: So I fired my financial advisor …

Post by FiveK »

BirdFood wrote: Mon Jun 10, 2024 7:26 pm
aliradler wrote: Mon Jun 10, 2024 6:26 pm To those who have asked - it's around 700k in CG's. And these stocks pay dividends which is a mixed bag in a taxable account. Would be taxed at 24%. And then in my state there is an extra tax over a certain AGI and this type of sale would cause me to enter that level. So it ends up being quite a bit in taxes. I'm trying to separate the tax part from the long-term investment part and figure out how to best "liberate" this money and put it in more sensible investments.
The capital gains themselves would only be taxed at 20% Federal, right? Or am I missing something?
Plus NIIT and plus state?
BirdFood
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Re: So I fired my financial advisor …

Post by BirdFood »

FiveK wrote: Mon Jun 10, 2024 7:34 pm
BirdFood wrote: Mon Jun 10, 2024 7:26 pm
aliradler wrote: Mon Jun 10, 2024 6:26 pm To those who have asked - it's around 700k in CG's. And these stocks pay dividends which is a mixed bag in a taxable account. Would be taxed at 24%. And then in my state there is an extra tax over a certain AGI and this type of sale would cause me to enter that level. So it ends up being quite a bit in taxes. I'm trying to separate the tax part from the long-term investment part and figure out how to best "liberate" this money and put it in more sensible investments.
The capital gains themselves would only be taxed at 20% Federal, right? Or am I missing something?
Plus NIIT and plus state?
Ah, yes. I meant, "Your Federal tax would only be..." but I was forgetting NIIT.

I would sell them all anyway, but that's my own personal risk tolerance or lack thereof.
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coffeeandcats
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Re: So I fired my financial advisor …

Post by coffeeandcats »

I’m pretty close to just selling them all because my risk tolerance is low for what I know I don’t know and in this case what I think most people don’t know (aka you can’t time the market, you really can’t predict or pick stocks). I’ve started to play around with numbers to see if I can figure out which decision is best (sell all, sell most or sell a little of all to keep a more balanced portfolio). Too many variables.

Has anyone here dealt with a situation of having a large group of individual stocks and wanting to shift to passive income?
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FiveK
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Re: So I fired my financial advisor …

Post by FiveK »

aliradler wrote: Mon Jun 10, 2024 8:09 pm Has anyone here dealt with a situation of having a large group of individual stocks and wanting to shift to passive income?
That is similar to a large number of lots of an individual stock.

One way to approach it:
1) Determine how much of a charitable contribution you would like to make and use your lowest percentage cost basis shares to make that contribution.
2) Determine how much tax you are willing to pay this year and use your highest percentage cost basis shares to incur the income that causes that tax.

Repeat next year.
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coffeeandcats
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Re: So I fired my financial advisor …

Post by coffeeandcats »

This sounds like a very reasonable compromise!
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coffeeandcats
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Re: So I fired my financial advisor …

Post by coffeeandcats »

This sounds like a very reasonable compromise!
2commaBH
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Re: So I fired my financial advisor …

Post by 2commaBH »

aliradler wrote: Mon Jun 10, 2024 8:09 pm
Has anyone here dealt with a situation of having a large group of individual stocks and wanting to shift to passive income?
I assume you mean passive investing not passive income. Yes, I did this. I bought individual stocks for years (no financial advisor I could blame) and overall did pretty OK. Then I found BH and loved the simplicity of the 3-fund portfolio. So I bit the bullet and sold it all. That year (2009) was a tough tax year, but I weathered it and was happy I had a gain to pay tax on. Yes 20% or more may go to taxes, but that's still 80% coming back to you.

When I make a decision to do something that will improve my situation, I view any delay in execution as sub-optimal. YMMV.
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coffeeandcats
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Re: So I fired my financial advisor …

Post by coffeeandcats »

I’m pretty tempted to sell it all and just be done and move into passive investing options. It’s impossible to know what next years will bring so hard to justify waiting although anyone advocating for waiting please speak now!
westpac
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So I fired my financial advisor …

Post by westpac »

I had a same thing with TDAmerica. I just sold it all, moved to VG 3 fund
and I was done. I recommend Collin's The simple path to wealth now
found in many used book shops such as thrift books.

Westpac
Still on Patrol.
suemarkp
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Re: So I fired my financial advisor …

Post by suemarkp »

Based on your current income and the dividends that are rolling in, where does that land you in the LTCG brackets -- 0%, 15%, or 20%? There is NIIT too which kicks in at $200K for singles and $250K for married. I would try to sell enough each year to push you up to just where NIIT begins, unless you are already past that point. If past it, or even close to it, will you ever be back in the 15% LTCG bracket? If not, suck it up and sell because you are going to pay those taxes at some point.
Mark | Somewhere in WA State
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