I'm thinking of self managing, but I have a lot of questions (and some doubts)

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LongTermRequest
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I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by LongTermRequest »

Hello all, I'm new to the forum and the Boglehead philosophy, and I'm rather sold on its premise. I've been reading the wiki and learning about it, and I recently started reading the Boglehead's Guide to Investing.

With that I've wanted to transition from using a financial advisor from Schwab (who doesn't charge AUM) to self managing a very simple portfolio in a taxable account. I should preface this by saying I came into a massive amount of money over time when my very early Bitcoin investments made over a decade ago exploded in value. I began transitioning out of crypto and into the broader market, leaving me with hundreds of thousands out of crypto.

I presently have most of that invested through a couple of products that my advisor recommended, one being Schwab's robo advisor and the other being a dividend focused managed portfolio that charges shy over 1%. I discussed with my advisor that I wanted to move away from these products towards a simpler portfolio and he (understandably) was very dismissive of the idea, trying to tell me that investing in index funds and the advice around it is geared towards people who are investing maybe a few hundred a month and haven't started out with much.

He suggested that because I was starting from such a large sum of money to begin with, that investing for me was entirely different. He encouraged that strategy as I was maxing out my Roth IRA, but not for investing the large sum I have within taxable accounts. He tried to emphasize the tax implications of using a basic 2/3 fund portfolio, pointing out that I wouldn't be able to take advantage of tax loss harvesting, and the tax implications associated with having bonds in a taxable account. He then recommended me another Schwab product (Schwab Personalized Indexing) as an alternative, but after doing some research I don't think I buy it.

My problem is I have a large sum of money that I don't want to mess up, and a financial advisor I don't think has my best interests in mind (just pushing Schwab related products and managed accounts). I find the boglehead philosophy appealing for its simplicity and elegance, and that it seems like I can't mess it up.

I appreciate any guidance and I'm thankful for your time in reading/responding to this.

---

EDIT Here is an edit to follow the portfolio question format.

Emergency funds: $20,000

Debt: $0

Tax Filing Status: Single

Tax Rate: 22% Federal, 5.525% State

State of Residence: New Jersey

Age: 29

Desired Asset allocation: 90% stocks / 10% bonds
Desired International allocation: 25 - 35% of stocks

Current retirement assets

Total Portfolio Size: $654,583.83

Taxable
18.34% cash
49.60% Managed Portfolio (1.08% fee)
31.10% Schwab Intelligent Portfolio (unknown average expense ratio)

My 401k
0.37% Vanguard Target Retirement 2060 Trust (0.04% expense ratio)
8% Company Match

My Roth IRA at Schwab
0.45% SPDR Portfolio S&P 500 ETF (SPLG) (0.02% expense ratio)
0.13% Vanguard Total International Stock Index Fund ETF (VXUS) (0.08% expense ratio)

Contributions

New annual Contributions

$3,023.96 my 401k (includes my 6% plus employer's 8% match)

$6,999.96 my Roth IRA

Available funds

Funds available in my 401(k)
$2,441.70 - Vanguard Target Retirement 2060 Trust (0.04% expense ratio)

Questions:

1) Am I diving into this too recklessly given the large amount of money I have?

2) Because I'm not the average person with the average circumstance, is investing for me that fundamentally different? It seems like he's implying it should be much more complicated than the boglehead philosophy would suggest.

3) With a 2 or 3 fund portfolio and with a long time horizon (35 years), will tax loss harvesting play a significant role? Is there a tax efficient way to go about managing a simple portfolio in a taxable account?
Last edited by LongTermRequest on Sun Feb 02, 2025 11:59 am, edited 1 time in total.
invest4
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by invest4 »

No one cares more about your money than you do. You can absolutely manage it yourself, along with the support of this community.

If you want comprehensive advice, please edit this post (pencil) and utilize the template below:

https://www.bogleheads.org/wiki/Asking_ ... _questions
crre
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by crre »

of course he does not have your best interests at heart, he has his own! but i understand the psychological aspect and the nagging doubts. you are talking about a long time horizon, so here's what i would do: move half of your money today out of schwab and into a self-managed portfolio. mark your calendar to revisit in a year, at which point you can move the rest, or half of it, or whatever you feel comfortable with.

you will feel better having done something, i'm sure.
steadyosmosis
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by steadyosmosis »

(reply removed)
Last edited by steadyosmosis on Mon Feb 03, 2025 5:00 pm, edited 4 times in total.
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mhalley
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by mhalley »

YOU are not average, so why should you settle for AVERAGE returns? Investing is way too complicated to do yourself! Remember that this guy is at heart a salesman, and he is trained on what exactly to say to discourage diy investing.
By having many thousands of $$$$ that aum is SWEEEEEEEEET! And he will say anything to keep it.
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Beensabu
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by Beensabu »

LongTermRequest wrote: Sat Feb 01, 2025 9:01 pm taxable account
Because of this ^, you should really probably definitely do what this poster said:
invest4 wrote: Sat Feb 01, 2025 11:06 pm If you want comprehensive advice, please edit this post (pencil) and utilize the template below:

https://www.bogleheads.org/wiki/Asking_ ... _questions
The reason being that nobody wants you to just go selling current holdings willy-nilly and creating taxable events for yourself.

If you edit your post according to those guidelines, people will have the information they need to help you get a responsible plan together for shifting from whatever you have going on in your taxable account now to DIY index investing without paying a bunch of extra taxes just because.
managed portfolio that charges shy over 1%
Nope. Don't pay AUM fees. Definitely not 1% or higher.
...trying to tell me that investing in index funds and the advice around it is geared towards people who are investing maybe a few hundred a month and haven't started out with much.
That's funny, because it actually saves people who have oodles of money sooooo much more.

For example: 0.04% (expense ratio of a total market index fund) of $1m is $400, while 1.04% of $1m is $10,400. Per year.
He suggested that because I was starting from such a large sum of money to begin with, that investing for me was entirely different.
Only as far as he's concerned, because he gets that 1% of all your money every single year, remember? He wants clients with lots of money. 1% of $10k is $100, while 1% of $1m is $10k.
I find the boglehead philosophy appealing for its simplicity and elegance, and that it seems like I can't mess it up.
:D

Just do the thing this poster said:
invest4 wrote: Sat Feb 01, 2025 11:06 pm If you want comprehensive advice, please edit this post (pencil) and utilize the template below:

https://www.bogleheads.org/wiki/Asking_ ... _questions
Because there are tax implications to making changes in your taxable account. But nobody can tell you what those will be based off the information you have provided so far. And it's important for you to know what those will be before you do anything.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
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dogagility
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by dogagility »

Welcome to the forum.

I agree with others that your advisor is a salesperson giving you poor advise and you should create another post using the asking portfolio questions format.

Congratulations on moving out of crypto and exploring a simple, time-tested investing process.
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BirdFood
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by BirdFood »

LongTermRequest wrote: Sat Feb 01, 2025 9:01 pm I presently have most of that invested through a couple of products that my advisor recommended, one being Schwab's robo advisor and the other being a dividend focused managed portfolio that charges shy over 1%.
That makes me nervous. What's the point of dividend focused?
LongTermRequest wrote: Sat Feb 01, 2025 9:01 pm I discussed with my advisor that I wanted to move away from these products towards a simpler portfolio and he (understandably) was very dismissive of the idea, trying to tell me that investing in index funds and the advice around it is geared towards people who are investing maybe a few hundred a month and haven't started out with much.
That makes me more nervous. I would run away from that advisor, fast.
LongTermRequest wrote: Sat Feb 01, 2025 9:01 pm He suggested that because I was starting from such a large sum of money to begin with, that investing for me was entirely different.
You mentioned hundreds of thousands. Index funds are perfectly appropriate for that amount. They're appropriate for millions. Multiple millions.
LongTermRequest wrote: Sat Feb 01, 2025 9:01 pmThis whole situation makes me wonder as well. Am I diving into this too recklessly given the large amount of money I have?
How large? Have I misunderstood and is it hundreds of millions?
hudson
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by hudson »

LongTermRequest wrote: Sat Feb 01, 2025 9:01 pm I appreciate any guidance and I'm thankful for your time
Consider reading W. Bernstein's
Ages of the Investor, Book 1
Pillars 2d Ed.


Advisors:
How do you get one that you can trust? I know of no way.
How do you keep all of that money that your are paying them? Do it yourself. Sure there's a learning curve.
Do advisors know the future? Sure, they get a guaranteed cut from you no matter what the market does.
If an advisor charges .5% that's $500 per year per $100K. That's a 50 basis point deduction every year. You can keep those 50 basis points with a little education?

How do you keep from messing up until you survive the learning curve?
Short and intermediate treasuries and FDIC/NCUA CDs. Think 4% plus for now.
Jack FFR1846
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by Jack FFR1846 »

I came into Bogleheads a bit over a decade ago. As an engineer, I require proof of anything before I believe it. But over time, I researched, checked results, did some math, did some experiments and what do you know? The Boglehead method not only works, but it returns better than any of these wizz bang alternative methods.

Your Schwab person wants you in an investment with a 1% ER? Is this person a time machine inventor and just came here from 1972? I tell people that 0.1% is highway robbery. 1% is just unheard of these days.

My own portfolio is probably middling by Boglehead standards at about $5M. I do a very, very simple 2 fund portfolio because I can't find a single US company that is not heavily international. But 3 fund is just fine too and I did that for many years. Try it.

Investment management. Sigh. 2 things. For my $5M portfolio, I spend 15 minutes a year on actual management of it. That's mostly the occasional tax loss harvesting when a category gets more than 5% from target. Then I move a small portion, maybe 2 or $300k with a "sell dollars and use to buy dollars of funds" at my Fidelity IRA. Speaking of Fidelity, they did a study of their 401k holders and found that those who did far better than any other had forgotten they had a Fidelity 401k. I say that dead people outperformed all others. So there's the "management time" out the window. If you want to do better than anyone else, do nothing. Reminds me of a Jack Bogle saying, "Don't do something, just stand there.".
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GrumpyFarmer
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by GrumpyFarmer »

Good day.

No matter what whether you decide to do it your self or trust an advisor, that is still your decision.

If getting wrapped around the axle about it, I’d recommend focus on educating yourself until you can make a well informed decision. After reading the Bogleheads book(s) maybe check out ‘the four pillars of investing’ if you have not already. Maybe then read the Bogleheads guide to investing again and it might connect some more dots.

If your advisor that does not think index funds are a wise decision, that is a really big data point. I would offer if they were a stock picking wizard, he/she probably would not have had time to get you in his/her schedule much less even be schlepping for Schwab as an advisor, unless they are just volunteering their time. Advisors usually charge a fee or % and own none of the risk for what happens. I would proceed with caution as far as that goes. ‘Jesus take the wheel’ is not an investing strategy IMO.

What you do with your money is your decision. Sure you can outsource decision making or delegate, but It doesn’t get much simpler to pick 3 funds and not touch them, unless you prefer just 2 funds. :sharebeer

Personally I think since this is new and you are undecided, treat it like a windfall. Give yourself a few months to decide. In the mean time educate yourself until you are ready. Or don’t, it’s your money.
hudson
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by hudson »

Jack FFR1846 wrote: Sun Feb 02, 2025 7:20 am our Schwab person wants you in an investment with a 1% ER? Is this person a time machine inventor and just came here from 1972? I tell people that 0.1% is highway robbery. 1% is just unheard of these days.
VTI...total stock is .03%...world class expense ratio
SCHP...intermediate TIPS is .03%
VGSH....short treasury is .04%

Buy your own treasuries, TIPS, and CDs: expense ratio = 0 :)

Bottom Line: World class expense ratios like above are easily available to all.
A 1% expense ratio? wow; is it also a load fund?
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retired@50
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by retired@50 »

LongTermRequest wrote: Sat Feb 01, 2025 9:01 pm
I appreciate any guidance and I'm thankful for your time in reading/responding to this.
I agree with the others in this thread. If you're smart enough to read a Boglehead book and create an account on this site, then you're smart enough to handle your own money.

I think the adviser is the source of your doubts. He's suggesting things that just aren't true.

Please, use the asking portfolio questions format that was linked up-thread. The simple act of gathering all the relevant information will be an education in itself.

Regards,
"All of us would be better investors if we just made fewer decisions." - Daniel Kahneman
southernlucky
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by southernlucky »

Hi op. I echo the other comments to avoid the advisor/salesperson. He is wrong. You can easily do it yourself with a simple 2 or 3 index fund portfolio and save yourself tons of future expense and aggravation in the process. If you prefer even more simplicity then there are all in one, balanced index funds too (e.g., iShares AOx ETF funds) that will automatically rebalance for you for truly hands off investing too (albeit with slightly higher <0.2% expense ratios and tax drag but definitely cheaper than using a FA). Take your time. There is no rush. Read, learn and continue to seek further guidance here. Good luck! You got this!!
“The Twelve Pillars of Wisdom” speech by Jack Bogle in 2001 is my go to reference for investing: | https://boglecenter.net/wp-content/uploads/AZRepublic-4-27-01.pdf
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by tibbitts »

LongTermRequest wrote: Sat Feb 01, 2025 9:01 pm I came into a massive amount of money...
You're being unspecific about the amount and I probably understand why but it does matter because when you get past a certain point there are some considerations that most of us don't have experience with. Not so much in generic asset allocation but in taxes and estate planning and some other considerations. That seems to have nothing to do with what the Schwab person is talking about though.
carolinaman
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by carolinaman »

I agree with others that you are quite capable of managing your own investments.

I agree you should post in the format provided to you.

One area that might be tricky is minimizing taxes on the transition from Schwab to your new investments. You want to avoid large capital gains and higher taxes if possible. But this forum can advise you on how to do that in a tax smart way.

Best wishes.
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by White Coat Investor »

LongTermRequest wrote: Sat Feb 01, 2025 9:01 pm Hello all, I'm new to the forum and the Boglehead philosophy, and I'm rather sold on its premise. I've been reading the wiki and learning about it, and I recently started reading the Boglehead's Guide to Investing.

With that I've wanted to transition from using a financial advisor from Schwab (who doesn't charge AUM) to self managing a very simple portfolio in a taxable account. I should preface this by saying I came into a massive amount of money over time when my very early Bitcoin investments made over a decade ago exploded in value. I began transitioning out of crypto and into the broader market, leaving me with hundreds of thousands out of crypto.

I presently have most of that invested through a couple of products that my advisor recommended, one being Schwab's robo advisor and the other being a dividend focused managed portfolio that charges shy over 1%. I discussed with my advisor that I wanted to move away from these products towards a simpler portfolio and he (understandably) was very dismissive of the idea, trying to tell me that investing in index funds and the advice around it is geared towards people who are investing maybe a few hundred a month and haven't started out with much.

He suggested that because I was starting from such a large sum of money to begin with, that investing for me was entirely different. He encouraged that strategy as I was maxing out my Roth IRA, but not for investing the large sum I have within taxable accounts. He tried to emphasize the tax implications of using a basic 2/3 fund portfolio, pointing out that I wouldn't be able to take advantage of tax loss harvesting, and the tax implications associated with having bonds in a taxable account. He then recommended me another Schwab product (Schwab Personalized Indexing) as an alternative, but after doing some research I don't think I buy it.

My problem is I have a large sum of money that I don't want to mess up, and a financial advisor I don't think has my best interests in mind (just pushing Schwab related products and managed accounts). I find the boglehead philosophy appealing for its simplicity and elegance, and that it seems like I can't mess it up.

This whole situation makes me wonder as well. Am I diving into this too recklessly given the large amount of money I have? Because I'm not the average person with the average circumstance, is investing for me that fundamentally different? It seems like he's implying it should be much more complicated than the boglehead philosophy would suggest. Is tax loss harvesting that big of a deal long term as the portfolio appreciates in value (I'm talking a time horizon of 30-35 years)?

I appreciate any guidance and I'm thankful for your time in reading/responding to this.
The questions we can handle and the doubts you can probably handle. But your choices aren't just DIY or use a crappy advisor. That's a false dichotomy. You can get a good advisor who offers good advice at a fair price. There are also an increasing number of "validator-serving" advisors out there who are perfect if you just need a little help.

It's obviously BS that index funds don't work for high income/wealthy people. Some people invest hundreds of thousands of dollars into index funds every month. They still work just fine. In fact, they are a particularly tax-efficient way to invest compared to most others.

You can tax loss harvest just fine with a simple portfolio. For example, 60% of our portfolio is in stocks, in just four asset classes. They're pretty much all in taxable now, so two funds for each asset class so there is always a tax loss harvesting partner. Plenty of tax losses and I only had to do it once or twice in 2020 and once in 2022 and never since.

You seem particularly worried about your "massive" amount of money. I don't know how much money you have, but the likelihood that it is the most of anyone on this forum is pretty darn low. I assure you this is the same game whether you are investing $5,000, $50,000, $500,000, $5 million, or $50 million. Just more zeros. I am doing the same processes I did 20 years ago with a 4 figure portfolio with a much larger portfolio now.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by goodenyou »

I will echo the opinions stated already. The irony of investing is that simplicity wins a vast majority of the time. The risk of beating simplicity isn't worth it and may cost you dearly. The financial industry makes a killing because investors don't realize that advisors don't have the secret sauce to guarantee that they can beat a simple, low-cost approach to investing. What advisors offer, most of the time, is the hand-holding that keeps investors invested (the behavioral aspects of investing). The behavioral aspect is very real and very important and often overlooked. It is undoubtedly better to pay someone dearly to keep you invested than it is to make behavioral errors that destroy the return on your investments. That's where most investors make their mistakes. On the flip side, some investors can get caught up with unscrupulous advisors that steal their money, and they would have been much better off with an inefficient and "stupid" portfolio that they designed, instead of having someone steal their money.
"Ignorance more frequently begets confidence than does knowledge" | “At 50, everyone has the face he deserves”
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by hudson »

goodenyou wrote: Sun Feb 02, 2025 9:08 am On the flip side, some investors can get caught up with unscrupulous advisors that steal their money,
I looked at a co-worker's investing statement from a local bank. He had $30K invested from a previous job.
He was invested in maybe five 7.25% load funds. They appeared to change his investments every quarter.
I told him that he was getting robbed, and that he should do something different. He said that he was fine; his manager was his brother-in-law.
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by goodenyou »

hudson wrote: Sun Feb 02, 2025 9:19 am
goodenyou wrote: Sun Feb 02, 2025 9:08 am On the flip side, some investors can get caught up with unscrupulous advisors that steal their money,
I looked at a co-worker's investing statement from a local bank. He had $30K invested from a previous job.
He was invested in maybe five 7.25% load funds. They appeared to change his investments every quarter.
I told him that he was getting robbed and that he should do something different. He said that he was fine; his manager was his brother-in-law.
Fabulous. He can enrich his in-law and keep peace in the family. A real win! :twisted:

Financial ignorance is expensive.
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by nedsaid »

If you want to self manage but have some doubts about it, there are good solutions. For tax deferred retirement accounts such as a workplace savings plan, a Traditional IRA, or a ROTH IRA you can use an Asset Allocation fund if you want a steady asset allocation throughout life or a Target Date Retirement fund if you want a portfolio that becomes more conservative as you age. You want these type of funds to be based upon indexes. Schwab offers both type of funds.

For a taxable account, I would not use an Asset Allocation Fund or a Target Date Fund because these funds rebalance their portfolios and you might get unwanted capital gains distributions in the process. Instead, I would use a simple portfolio of a few index funds and if you want to rebalance the taxable portfolio, you can do some tax planning beforehand so that you don't get an unexpected tax bill. You can minimize taxes with careful trading.

Here I would minimize trades, even to rebalance. If you wanted to get a bit fancier, you could have a tax loss partner for each fund using a similar fund that follows a different index to aid in tax loss harvesting.
A fool and his money are good for business.
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by Ryzan »

LongTermRequest wrote: Sat Feb 01, 2025 9:01 pm ...I came into a massive amount of money over time when my very early Bitcoin investments made over a decade ago exploded in value...

...He suggested that because I was starting from such a large sum of money to begin with...

...My problem is I have a large sum of money that I don't want to mess up...

...Am I diving into this too recklessly given the large amount of money I have?
Beyond the edge cases, the size of the portfolio has little bearing on the investment choices.
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by snic »

goodenyou wrote: Sun Feb 02, 2025 9:22 am
hudson wrote: Sun Feb 02, 2025 9:19 am

I looked at a co-worker's investing statement from a local bank. He had $30K invested from a previous job.
He was invested in maybe five 7.25% load funds. They appeared to change his investments every quarter.
I told him that he was getting robbed and that he should do something different. He said that he was fine; his manager was his brother-in-law.
Fabulous. He can enrich his in-law and keep peace in the family. A real win! :twisted:

Financial ignorance is expensive.
Perfect! Mind if I add it to my signature?
"Financial ignorance is expensive."
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goodenyou
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by goodenyou »

snic wrote: Sun Feb 02, 2025 10:44 am
goodenyou wrote: Sun Feb 02, 2025 9:22 am

Fabulous. He can enrich his in-law and keep peace in the family. A real win! :twisted:

Financial ignorance is expensive.
Perfect! Mind if I add it to my signature?
I would be honored! :D
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by BolderBoy »

LongTermRequest wrote: Sat Feb 01, 2025 9:01 pm I presently have most of that invested through a couple of products that my advisor recommended, one being Schwab's robo advisor and the other being a dividend focused managed portfolio that charges shy over 1%. I discussed with my advisor that I wanted to move away from these products towards a simpler portfolio and he (understandably) was very dismissive of the idea, trying to tell me that investing in index funds and the advice around it is geared towards people who are investing maybe a few hundred a month and haven't started out with much.
I love it when new people come to the forum and post about their experiences with "financial advisors". Brings to mind this fine quotation from Bill Bernstein (who haunts these forums from time-to-time.)

“Act as if every broker, insurance salesman, mutual fund salesperson, and financial advisor you encounter is a hardened criminal, and stick to low-cost index funds, and you’ll do just fine.”
― William J. Bernstein, If You Can: How Millennials Can Get Rich Slowly

Emphasis mine.

OP, we can give you all the help you need, for free.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
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LongTermRequest
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by LongTermRequest »

invest4 wrote: Sat Feb 01, 2025 11:06 pm No one cares more about your money than you do. You can absolutely manage it yourself, along with the support of this community.

If you want comprehensive advice, please edit this post (pencil) and utilize the template below:

https://www.bogleheads.org/wiki/Asking_ ... _questions
Done!
Topic Author
LongTermRequest
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by LongTermRequest »

White Coat Investor wrote: Sun Feb 02, 2025 8:27 am The questions we can handle and the doubts you can probably handle. But your choices aren't just DIY or use a crappy advisor. That's a false dichotomy. You can get a good advisor who offers good advice at a fair price. There are also an increasing number of "validator-serving" advisors out there who are perfect if you just need a little help.

It's obviously BS that index funds don't work for high income/wealthy people. Some people invest hundreds of thousands of dollars into index funds every month. They still work just fine. In fact, they are a particularly tax-efficient way to invest compared to most others.

You can tax loss harvest just fine with a simple portfolio. For example, 60% of our portfolio is in stocks, in just four asset classes. They're pretty much all in taxable now, so two funds for each asset class so there is always a tax loss harvesting partner. Plenty of tax losses and I only had to do it once or twice in 2020 and once in 2022 and never since.

You seem particularly worried about your "massive" amount of money. I don't know how much money you have, but the likelihood that it is the most of anyone on this forum is pretty darn low. I assure you this is the same game whether you are investing $5,000, $50,000, $500,000, $5 million, or $50 million. Just more zeros. I am doing the same processes I did 20 years ago with a 4 figure portfolio with a much larger portfolio now.
In that case would a flat fee advisor be recommended (or one that charges on an hourly basis)? I might explore that option just to get some validation that I'm handling my money well with what I plan to do.

It sounds like - however - that to really take advantage of things like tax loss harvesting I'd have to go well beyond a 2 or 3 fund portfolio, which goes against the simplicity I find appealing in the first place. To my understanding, tax loss harvesting opportunities diminish as the portfolio rises in value, am I wrong? Is it worth going after tax loss harvesting opportunities early on in a portfolio's life?
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by retired@50 »

LongTermRequest wrote: Sat Feb 01, 2025 9:01 pm
Tax Filing Status: Single
Tax Rate: 22% Federal, 5.525% State
State of Residence: New Jersey

Age: 29

Desired Asset allocation: 90% stocks / 10% bonds
Desired International allocation: 25 - 35% of stocks

Current retirement assets

Total Portfolio Size: $654,583.83

Taxable
18.34% cash
49.60% Managed Portfolio (1.08% fee) <- if you're seeking advice on what to do with these two accounts you will probably need to tell us what's inside of each of them.
31.10% Schwab Intelligent Portfolio (unknown average expense ratio)

My 401k
0.37% Vanguard Target Retirement 2060 Trust (0.04% expense ratio)
8% Company Match

My Roth IRA at Schwab
0.45% SPDR Portfolio S&P 500 ETF (SPLG) (0.02% expense ratio)
0.13% Vanguard Total International Stock Index Fund ETF (VXUS) (0.08% expense ratio)

Contributions

New annual Contributions
$3,023.96 my 401k (includes my 6% plus employer's 8% match)
$6,999.96 my Roth IRA

Questions:
1) Am I diving into this too recklessly given the large amount of money I have? <- No, you can take your time and separate from these advisors at your own pace.

2) Because I'm not the average person with the average circumstance, is investing for me that fundamentally different? It seems like he's implying it should be much more complicated than the boglehead philosophy would suggest. <- No, it's not fundamentally different. He's pulling your leg.

3) With a 2 or 3 fund portfolio and with a long time horizon (35 years), will tax loss harvesting play a significant role? Is there a tax efficient way to go about managing a simple portfolio in a taxable account? <- Yes. Tax efficiency is not so complicated that you can't learn about it. Tax loss harvesting sounds like an advanced concept, and it is beyond what some people are comfortable with, but it's really not that hard. Plus, it's actually not required to be a successful investor. The tax loss harvesting concept is often used to confuse people. Advisers tend to make it sound as if it's mandatory to be successful, and that isn't really true.
Thanks for making the updates as requested. See comments above in blue.

Since the vast majority of your portfolio is in a taxable account, it would appear that to achieve the 10% in bonds you desire that you'll have to use a bond fund in your taxable account. At your tax marginal tax rate you may want to explore the Vanguard NJ tax-exempt fund, or you may prefer to use US Treasury products (either a fund or buy directly) which would allow you to avoid NJ state income taxes.

You could also start contributing more to your 401k plan, and in fact you could probably afford to contribute the maximum each year. If that larger 401k contribution leaves your paycheck a little short of what you'd like, then you can use some of the cash in your taxable account for living expenses. This will essentially be pumping up your 401k balance, and possibly shrinking your taxable balance. This will reduce the tax drag you're paying each year at tax time. At your age, making tax efficient choices will help over the long term.

Regards,
Last edited by retired@50 on Sun Feb 02, 2025 1:42 pm, edited 1 time in total.
"All of us would be better investors if we just made fewer decisions." - Daniel Kahneman
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Beensabu
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by Beensabu »

LongTermRequest wrote: Sat Feb 01, 2025 9:01 pm Taxable
49.60% Managed Portfolio (1.08% fee)
31.10% Schwab Intelligent Portfolio (unknown average expense ratio)
Do you know what each of these "portfolios" actually holds?

Each one is a collection of mutual funds, ETFs, individual stocks, etc. Could you list that?

You're paying $3500/yr for the "Managed Portfolio" (plus whatever expense ratios for the funds it contains). That's more than your annual 401k contribution.

Additionally, you've indicated that the "Managed Portfolio" is dividend-focused, which is ridiculous in a taxable account, especially for a 29-year old. It's like they want you to pay extra taxes for the next 40 years on income you don't need yet just because.

Anyway, you have to get out of that thing, it's just costing you unnecessary fees and taxes. Could you list what is in it?
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
invest4
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by invest4 »

Thanks for re-posting with the form.

Some initial comments / questions:


Emergency Funds: How many months of expenses will 20K take you? I would not have any less than 3 mos. and preferably 6 mos. to handle extended job loss / other.


Debt: awesome...a critical accelerator for accumulating wealth. Importantly, as you grow in your career, make sure you are always living beneath your means...always. Of course, lifestyle inflation is a thing (like going out more often and / or more expense food, etc.). This is fine...just make sure you are thoughtful about it and are increasing your savings as your income grows.


Desired Asset Allocation: 90/10 is perfectly fine for your age with the important assumption that you know yourself and can handle the volatility and avoid bad behaviors like selling in a panic when it gets choppy. In regard to bonds / fixed income, I have found bonds more complex than stocks and strongly encourage you to start educating yourself now so you are prepared when you shift a larger part of your portfolio in that direction.

The current guidance for International is no less than 20% and not more than 40%.


Current Retirement Assets:

* What percentage of your salary is being saved?


* Do you have an HSA available to you?


* Do you have Mega Backdoor Roth available to you?


Thus far, I've had more tax advantaged space available to me than I have money to fill them all. Consequently, I have had no interest to have anything in a taxable account until those spaces are filled.


Your Questions


1. I don't know if I would call anything you have done "reckless", but you have a great opportunity to make improvements.

- Managed Portfolio: No one cares more about your money than you do. You are giving money away...get rid of the advisor as you can absolutely managed it yourself, along with support from this community.


- Investments: You want / need a simple, diversified portfolio that matches your tolerance for risk and will endure for the long term. Furthermore, do not underestimate the value of simplicity...you need very few investments to have a solid portfolio. Easy to understand and manage for the win.


Typical portfolio:

Total US Stock Market (VTI)

Total Intl Stock Market (VXUS)

Total US Bonds (BND) / other fixed income


Your Roth account should hold the investments which will have the greatest potential to increase in value.


2. You have done well for your age thus far, but whether it is $650K or $2M, the advice I would give you will be similar (barring any special circumstances). Appears the advisor fills your head with nonsense with the aim of benefiting himself. Say goodbye.


3. As mentioned, I have not yet had a taxable account...others may provide some guidance here.


Many of us discovered this forum later in life. You have had the good fortune to find if sooner...learn and enjoy!


Best wishes.
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by WeakOldGuy »

OP, you can certainly handle your investments yourself. You have a nice amount of money and a young age. You are wise to look at taking responsibility for it now.

My, not original, suggestions would be.

Immediately:
- end your relationship with the managed portfolio. This will end that 1% AUM. You won't need to change the individual investments, but it will get you out of that expensive and unnecessary management fee.
- Once those securities are out of the managed portfolio then go in and make sure that any securities have automatic reinvesting of dividends is turned off.
- Make sure that the cash in your account is invested in a money market fund. SWVXX is a good option.

As someone else mentioned, I would increase your contributions to your 401k. For 2025 the contribution limit is $23,500 I believe. That is about $1,950 per month. I am a little confused by what you wrote;
New annual Contributions

$3,023.96 my 401k (includes my 6% plus employer's 8% match)

$6,999.96 my Roth IRA
How much are you contributing to your 401k each month? 6% of your income? How much is your employer matching? 8% of your income or 8% of your contributions? You can increase your 401k contributions, take the tax deduction and use some of your taxable account to cover your living expenses.

I think a target date fund is great for your 401k and wouldn't make any change at this time there.
On investing; I have lots of questions, many opinions, and little knowledge. A dangerous combination. Be warned.
Topic Author
LongTermRequest
Posts: 9
Joined: Sat Feb 01, 2025 8:04 pm

Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by LongTermRequest »

retired@50 wrote: Sun Feb 02, 2025 12:21 pm
LongTermRequest wrote: Sat Feb 01, 2025 9:01 pm
Tax Filing Status: Single
Tax Rate: 22% Federal, 5.525% State
State of Residence: New Jersey

Age: 29

Desired Asset allocation: 90% stocks / 10% bonds
Desired International allocation: 25 - 35% of stocks

Current retirement assets

Total Portfolio Size: $654,583.83

Taxable
18.34% cash
49.60% Managed Portfolio (1.08% fee) <- if you're seeking advice on what to do with these two accounts you will probably need to tell us what's inside of each of them.
31.10% Schwab Intelligent Portfolio (unknown average expense ratio)

My 401k
0.37% Vanguard Target Retirement 2060 Trust (0.04% expense ratio)
8% Company Match

My Roth IRA at Schwab
0.45% SPDR Portfolio S&P 500 ETF (SPLG) (0.02% expense ratio)
0.13% Vanguard Total International Stock Index Fund ETF (VXUS) (0.08% expense ratio)

Contributions

New annual Contributions
$3,023.96 my 401k (includes my 6% plus employer's 8% match)
$6,999.96 my Roth IRA

Questions:
1) Am I diving into this too recklessly given the large amount of money I have? <- No, you can take your time and separate from these advisors at your own pace.

2) Because I'm not the average person with the average circumstance, is investing for me that fundamentally different? It seems like he's implying it should be much more complicated than the boglehead philosophy would suggest. <- No, it's not fundamentally different. He's pulling your leg.

3) With a 2 or 3 fund portfolio and with a long time horizon (35 years), will tax loss harvesting play a significant role? Is there a tax efficient way to go about managing a simple portfolio in a taxable account? <- Yes. Tax efficiency is not so complicated that you can't learn about it. Tax loss harvesting sounds like an advanced concept, and it is beyond what some people are comfortable with, but it's really not that hard. Plus, it's actually not required to be a successful investor. The tax loss harvesting concept is often used to confuse people. Advisers tend to make it sound as if it's mandatory to be successful, and that isn't really true.
Thanks for making the updates as requested. See comments above in blue.

Since the vast majority of your portfolio is in a taxable account, it would appear that to achieve the 10% in bonds you desire that you'll have to use a bond fund in your taxable account. At your tax marginal tax rate you may want to explore the Vanguard NJ tax-exempt fund, or you may prefer to use US Treasury products (either a fund or buy directly) which would allow you to avoid NJ state income taxes.

You could also start contributing more to your 401k plan, and in fact you could probably afford to contribute the maximum each year. If that larger 401k contribution leaves your paycheck a little short of what you'd like, then you can use some of the cash in your taxable account for living expenses. This will essentially be pumping up your 401k balance, and possibly shrinking your taxable balance. This will reduce the tax drag you're paying each year at tax time. At your age, making tax efficient choices will help over the long term.

Regards,
I'll definitely look into the Vanguard New Jersey Long-Term Tax-Exempt Fund as an option for fixed income. It makes me a little nervous going all in on NJ bonds, but I've read that diversification isn't as much of a deal with bonds. Is that correct?

As for my 401k and maxing that out, that's certainly an interesting option. I was hoping with an invested amount of ~$650,000 I could simply semi-coast my way to traditional retirement at 65 (semi Coast in that I'd still contribute to my 401k). I suppose if I really wanna retire sooner than that I could explore this option. It's one I never thought of before, so I appreciate that.
Topic Author
LongTermRequest
Posts: 9
Joined: Sat Feb 01, 2025 8:04 pm

Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by LongTermRequest »

invest4 wrote: Sun Feb 02, 2025 1:12 pm Thanks for re-posting with the form.

Some initial comments / questions:


Emergency Funds: How many months of expenses will 20K take you? I would not have any less than 3 mos. and preferably 6 mos. to handle extended job loss / other.


Debt: awesome...a critical accelerator for accumulating wealth. Importantly, as you grow in your career, make sure you are always living beneath your means...always. Of course, lifestyle inflation is a thing (like going out more often and / or more expense food, etc.). This is fine...just make sure you are thoughtful about it and are increasing your savings as your income grows.


Desired Asset Allocation: 90/10 is perfectly fine for your age with the important assumption that you know yourself and can handle the volatility and avoid bad behaviors like selling in a panic when it gets choppy. In regard to bonds / fixed income, I have found bonds more complex than stocks and strongly encourage you to start educating yourself now so you are prepared when you shift a larger part of your portfolio in that direction.

The current guidance for International is no less than 20% and not more than 40%.


Current Retirement Assets:

* What percentage of your salary is being saved?


* Do you have an HSA available to you?


* Do you have Mega Backdoor Roth available to you?


Thus far, I've had more tax advantaged space available to me than I have money to fill them all. Consequently, I have had no interest to have anything in a taxable account until those spaces are filled.


Your Questions


1. I don't know if I would call anything you have done "reckless", but you have a great opportunity to make improvements.

- Managed Portfolio: No one cares more about your money than you do. You are giving money away...get rid of the advisor as you can absolutely managed it yourself, along with support from this community.


- Investments: You want / need a simple, diversified portfolio that matches your tolerance for risk and will endure for the long term. Furthermore, do not underestimate the value of simplicity...you need very few investments to have a solid portfolio. Easy to understand and manage for the win.


Typical portfolio:

Total US Stock Market (VTI)

Total Intl Stock Market (VXUS)

Total US Bonds (BND) / other fixed income


Your Roth account should hold the investments which will have the greatest potential to increase in value.


2. You have done well for your age thus far, but whether it is $650K or $2M, the advice I would give you will be similar (barring any special circumstances). Appears the advisor fills your head with nonsense with the aim of benefiting himself. Say goodbye.


3. As mentioned, I have not yet had a taxable account...others may provide some guidance here.


Many of us discovered this forum later in life. You have had the good fortune to find if sooner...learn and enjoy!


Best wishes.
I live with family so my monthly expenses are pretty low. That $20k will get me through at least 9 months of expenses.

As for asset allocation I am doing some research on alternatives to a regular bond fund like BND, like Treasury funds or state-specific bond funds to avoid some taxes, as my fixed income portion would need to be in taxable accounts. Is there anything in particular I should know about these options?

For your questions:

* When you factor in both earned and unearned income, I am investing about 14% of my total income.

* No I don't have an HSA available to me.

* No I don't have a mega backdoor Roth available to me.
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Beensabu
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by Beensabu »

LongTermRequest wrote: Sun Feb 02, 2025 8:19 pm As for asset allocation I am doing some research on alternatives to a regular bond fund like BND, like Treasury funds or state-specific bond funds to avoid some taxes, as my fixed income portion would need to be in taxable accounts. Is there anything in particular I should know about these options?
You may want to read this pinned post (Investment Planning):

viewtopic.php?t=6211

Tax-Exempt Bonds
EE and I-Bonds
Tax-Managed Funds
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
invest4
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by invest4 »

LongTermRequest wrote: Sun Feb 02, 2025 8:19 pm
I live with family so my monthly expenses are pretty low. That $20k will get me through at least 9 months of expenses.

As for asset allocation I am doing some research on alternatives to a regular bond fund like BND, like Treasury funds or state-specific bond funds to avoid some taxes, as my fixed income portion would need to be in taxable accounts. Is there anything in particular I should know about these options?

For your questions:

* When you factor in both earned and unearned income, I am investing about 14% of my total income.

* No I don't have an HSA available to me.

* No I don't have a mega backdoor Roth available to me.

* As highlighted by some of the others, I also agree that you should max out your 401k if you are able.


* If your employer does not offer you an HSA and you are otherwise eligible, I believe you can open your own HSA (recommend Fidelity which is often cited as the best). I would look into this as it is another tax advantaged account where you can put money into. I consider it my "medical 401k"...100K invested in it and counting.


* I think you may be overly concerned about taxes. You have a relatively small % in bonds / fixed income. You can simply put them in your 401k, no?


* I don't share your assessment that you have enough funds to "semi-coast" to financial freedom. I suspect you may eventually live on your own, maybe interested in a house, perhaps a family of your own, etc. Depending upon the lifestyle you desire for yourself, the increase in expenses can be significant. Also..life is a funny thing and may not unfold the way that you expect (extended job loss, health issues, other)

I would keep plugging away.


Best wishes.
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retired@50
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by retired@50 »

invest4 wrote: Sun Feb 02, 2025 9:56 pm
* I think you may be overly concerned about taxes. You have a relatively small % in bonds / fixed income. You can simply put them in your 401k, no?
The 401k, as described above, is less than 1% of the total portfolio, so not much room for bonds in there yet. If the OP contributes some money to the 401k plan, then it could be a place for a bond fund. That might actually help by creating a bit of diversification in the bond holdings.

Regards,
"All of us would be better investors if we just made fewer decisions." - Daniel Kahneman
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by White Coat Investor »

LongTermRequest wrote: Sun Feb 02, 2025 12:21 pm
White Coat Investor wrote: Sun Feb 02, 2025 8:27 am The questions we can handle and the doubts you can probably handle. But your choices aren't just DIY or use a crappy advisor. That's a false dichotomy. You can get a good advisor who offers good advice at a fair price. There are also an increasing number of "validator-serving" advisors out there who are perfect if you just need a little help.

It's obviously BS that index funds don't work for high income/wealthy people. Some people invest hundreds of thousands of dollars into index funds every month. They still work just fine. In fact, they are a particularly tax-efficient way to invest compared to most others.

You can tax loss harvest just fine with a simple portfolio. For example, 60% of our portfolio is in stocks, in just four asset classes. They're pretty much all in taxable now, so two funds for each asset class so there is always a tax loss harvesting partner. Plenty of tax losses and I only had to do it once or twice in 2020 and once in 2022 and never since.

You seem particularly worried about your "massive" amount of money. I don't know how much money you have, but the likelihood that it is the most of anyone on this forum is pretty darn low. I assure you this is the same game whether you are investing $5,000, $50,000, $500,000, $5 million, or $50 million. Just more zeros. I am doing the same processes I did 20 years ago with a 4 figure portfolio with a much larger portfolio now.
In that case would a flat fee advisor be recommended (or one that charges on an hourly basis)? I might explore that option just to get some validation that I'm handling my money well with what I plan to do.

It sounds like - however - that to really take advantage of things like tax loss harvesting I'd have to go well beyond a 2 or 3 fund portfolio, which goes against the simplicity I find appealing in the first place. To my understanding, tax loss harvesting opportunities diminish as the portfolio rises in value, am I wrong? Is it worth going after tax loss harvesting opportunities early on in a portfolio's life?
What do you mean "recommended"? I recommend you figure out how much advice you need. I recommend you figure out if you're a DIYer, a validator, or a delegator. Then you'll know what to do about an advisor. From the little of your writing that I've read, you seem like one who is a DIYer, or at least will be a year from now.

Yes, TLHing increases complexity. Whether that's worth it to you or not just depends. On you.

TLHing is worth doing when the market goes down a lot. I do it less and less as the years go by. I did it in 2020. And again in 2022. But I'm not doing it every month or every week or anything silly like that. The marginal utility of additional losses isn't that high to most of us.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
Topic Author
LongTermRequest
Posts: 9
Joined: Sat Feb 01, 2025 8:04 pm

Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by LongTermRequest »

Beensabu wrote: Sun Feb 02, 2025 8:47 pm
LongTermRequest wrote: Sun Feb 02, 2025 8:19 pm As for asset allocation I am doing some research on alternatives to a regular bond fund like BND, like Treasury funds or state-specific bond funds to avoid some taxes, as my fixed income portion would need to be in taxable accounts. Is there anything in particular I should know about these options?
You may want to read this pinned post (Investment Planning):

viewtopic.php?t=6211

Tax-Exempt Bonds
EE and I-Bonds
Tax-Managed Funds
Will do, I'll get to reading through that as soon as I'm able.
invest4 wrote: Sun Feb 02, 2025 9:56 pm
LongTermRequest wrote: Sun Feb 02, 2025 8:19 pm
I live with family so my monthly expenses are pretty low. That $20k will get me through at least 9 months of expenses.

As for asset allocation I am doing some research on alternatives to a regular bond fund like BND, like Treasury funds or state-specific bond funds to avoid some taxes, as my fixed income portion would need to be in taxable accounts. Is there anything in particular I should know about these options?

For your questions:

* When you factor in both earned and unearned income, I am investing about 14% of my total income.

* No I don't have an HSA available to me.

* No I don't have a mega backdoor Roth available to me.

* As highlighted by some of the others, I also agree that you should max out your 401k if you are able.


* If your employer does not offer you an HSA and you are otherwise eligible, I believe you can open your own HSA (recommend Fidelity which is often cited as the best). I would look into this as it is another tax advantaged account where you can put money into. I consider it my "medical 401k"...100K invested in it and counting.


* I think you may be overly concerned about taxes. You have a relatively small % in bonds / fixed income. You can simply put them in your 401k, no?


* I don't share your assessment that you have enough funds to "semi-coast" to financial freedom. I suspect you may eventually live on your own, maybe interested in a house, perhaps a family of your own, etc. Depending upon the lifestyle you desire for yourself, the increase in expenses can be significant. Also..life is a funny thing and may not unfold the way that you expect (extended job loss, health issues, other)

I would keep plugging away.


Best wishes.
I'm not sure how maxing out my 401k would work exactly. I work two part time jobs for the time being and only one provides the 401k. If I were to come close to maxing out my 401k I'd be dedicating my entire paycheck from one of my jobs to that, and that would create a large deficit in my budget. I understand I could use the cash I have on hand to live off of, but at a certain point wouldn't I just be selling off things in my taxable accounts to continue this? I'm not sure I feel comfortable doing this in the first place, given that I'd want to invest most if not all of the cash I have on hand. Plus I'm not sure if I can change what my 401k funds are invested in (I didn't see any mention of being able to do so in the company provided material). I'm not sure who I could talk to at my company (or if I'd need to reach out to Vanguard, since that's where my company handles retirement plans).

Based on other criteria I've read about online I don't think I'm HSA eligible at all since I'm not in a HDHP.

And you are right that in the future things can and likely will change. My family won't live forever, and I'll have to live either with other family or on my own by then. There are certain things I can see myself not doing (like buying a house, starting a family), but unexpected things can happen so I'll take that into account.
Topic Author
LongTermRequest
Posts: 9
Joined: Sat Feb 01, 2025 8:04 pm

Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by LongTermRequest »

WeakOldGuy wrote: Sun Feb 02, 2025 1:40 pm OP, you can certainly handle your investments yourself. You have a nice amount of money and a young age. You are wise to look at taking responsibility for it now.

My, not original, suggestions would be.

Immediately:
- end your relationship with the managed portfolio. This will end that 1% AUM. You won't need to change the individual investments, but it will get you out of that expensive and unnecessary management fee.
- Once those securities are out of the managed portfolio then go in and make sure that any securities have automatic reinvesting of dividends is turned off.
- Make sure that the cash in your account is invested in a money market fund. SWVXX is a good option.

As someone else mentioned, I would increase your contributions to your 401k. For 2025 the contribution limit is $23,500 I believe. That is about $1,950 per month. I am a little confused by what you wrote;
New annual Contributions

$3,023.96 my 401k (includes my 6% plus employer's 8% match)

$6,999.96 my Roth IRA
How much are you contributing to your 401k each month? 6% of your income? How much is your employer matching? 8% of your income or 8% of your contributions? You can increase your 401k contributions, take the tax deduction and use some of your taxable account to cover your living expenses.

I think a target date fund is great for your 401k and wouldn't make any change at this time there.
I appreciate your advice and questions. I'm definitely going to be ending the managed portfolio (and perhaps liquidating the assets in said portfolio, I have federal capital losses I can use), and moving that money to a money market fund until I figure out how exactly I want to proceed. I'm also going to be ending the Schwab Intelligent Portfolio and doing the same thing I think. The rest of the cash I have is in a HYSA, so for now I think that's okay even with rates coming down.

I also am hesitant to try maxing out my 401k given that do come close to that, I'm dedicating a whole paycheck from one of my jobs every time (I work two jobs, one of which offers the 401k). I know I have my cash that I could use to make up the deficit in my budget, but part of me wants to just invest the cash I have now. But I believe I understand the logic of doing that, as more money is going to be pouring into a tax advantaged account, and replacing money that would have been used in a taxable account. At some point though wouldn't I have to stop maxing out my 401k? Because at some point I'd need to sell off assets in my taxable account to make up for the budget deficit, and I don't imagine that's desirable.

As for your question, I'm contributing 6% of my gross income, and my employer is matching another 8% of my gross income.
invest4
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by invest4 »

LongTermRequest wrote: Mon Feb 03, 2025 3:56 pm I'm not sure how maxing out my 401k would work exactly. I work two part time jobs for the time being and only one provides the 401k. If I were to come close to maxing out my 401k I'd be dedicating my entire paycheck from one of my jobs to that, and that would create a large deficit in my budget. I understand I could use the cash I have on hand to live off of, but at a certain point wouldn't I just be selling off things in my taxable accounts to continue this? I'm not sure I feel comfortable doing this in the first place, given that I'd want to invest most if not all of the cash I have on hand. Plus I'm not sure if I can change what my 401k funds are invested in (I didn't see any mention of being able to do so in the company provided material). I'm not sure who I could talk to at my company (or if I'd need to reach out to Vanguard, since that's where my company handles retirement plans).

Based on other criteria I've read about online I don't think I'm HSA eligible at all since I'm not in a HDHP.

And you are right that in the future things can and likely will change. My family won't live forever, and I'll have to live either with other family or on my own by then. There are certain things I can see myself not doing (like buying a house, starting a family), but unexpected things can happen so I'll take that into account.
It's all about choices and doesn't have to be an all or nothing proposition. See if you can pick an annual minimum and then decide each year if you can do more. Some years back I had accumulated a significant amount of cash. My company began offering Mega Backdoor Roth and although it took me a few years to pour the cash into it due to annual limits, I did so because I thought it would be the best choice to achieve my financial goals for the long term...versus in a taxable account for example.
steadyosmosis
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by steadyosmosis »

LongTermRequest wrote: Mon Feb 03, 2025 4:07 pm I also am hesitant to try maxing out my 401k ...
I believe once a person fully understands how USA taxes work over their whole lifetime,
then they get serious about maxing out (if possible) their tax-advantaged options.
Credibility ... some posters have it.
WeakOldGuy
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by WeakOldGuy »

LongTermRequest wrote: Mon Feb 03, 2025 4:07 pm As for your question, I'm contributing 6% of my gross income, and my employer is matching another 8% of my gross income.
Sorry, I'm being slow. My experience with 401ks is pretty limited. In my experience, if an employer will make an "8% match" it meant that an employer would match your 401k contribution up to 8% of your salary. So if you were contributing 6%, then your employer would match that contribution. If you were contributing 10% of your income, they would only match 8% of your income.

So I'm confused (and amazed) that your employer would contribute more to your 401k than what you are contributing.
On investing; I have lots of questions, many opinions, and little knowledge. A dangerous combination. Be warned.
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Elric
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by Elric »

A couple of points to add to what others have said.
  • First, to be blunt, your advisor is full of it. Add a zero to get closer to our portfolio, and while it's definitely more complicated than a 3 fund portfolio, it's mostly in broad index funds. And when we were working, our annual investments were higher than your as well.
  • I'm disappointed in your advisor. Our Schwab rep. has never pushed using their management services.
  • To tax loss harvest, it's true you'll need more than 3 funds. But it doesn't add much complication. For example, use a total market fund and an S&P 500 index fund. That convers the domestic stock portion. The 3 fund portfolio is a fine approach consistent with Bogleheads principles, but Bogleheads principles (and Boghleheads) often have more than 3 funds (but not 50).
  • I would hold off on selling everything in the managed funds and intelliadvisor funds. Presumably you can keep what you have in them and just stop using those services. THEN come back and post what those holdings are, and get an idea of what to sell or not. There may be some keepers in there.
  • What marginal tax bracket are you in? That would help to determine if muni bonds are right for you.
  • Why can't you have bonds in your tax advantaged accounts?
"No man is free who must work for a living." (Illya Kuryakin)
hudson
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by hudson »

White Coat Investor wrote: Mon Feb 03, 2025 10:26 am Yes, TLHing increases complexity. Whether that's worth it to you or not just depends. On you.

TLHing is worth doing when the market goes down a lot. I do it less and less as the years go by. I did it in 2020. And again in 2022. But I'm not doing it every month or every week or anything silly like that. The marginal utility of additional losses isn't that high to most of us.
Tax Loss Harvesting?
I never set up my holdings so that I can use it.
It's just something that happens, at least for me, once every blue moon. Then I use it...only in a taxable account.
I think the last time that I used it was when I decided to dump SCHP (a very good intermediate TIPS ETF) and go all individual TIPS.
Have I ever made any money off of it? No way, I just didn't lose as much.
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retired@50
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by retired@50 »

Elric wrote: Mon Feb 03, 2025 10:17 pm ... Why can't you have bonds in your tax advantaged accounts?
He could, but they are such a tiny percentage of the portfolio that it would hardly have an impact.
My 401k
0.37% Vanguard Target Retirement 2060 Trust (0.04% expense ratio)
My Roth IRA at Schwab
0.45% SPDR Portfolio S&P 500 ETF (SPLG) (0.02% expense ratio)
0.13% Vanguard Total International Stock Index Fund ETF (VXUS) (0.08% expense ratio)
Regards,
"All of us would be better investors if we just made fewer decisions." - Daniel Kahneman
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LongTermRequest
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Re: I'm thinking of self managing, but I have a lot of questions (and some doubts)

Post by LongTermRequest »

Elric wrote: Mon Feb 03, 2025 10:17 pm A couple of points to add to what others have said.
  • First, to be blunt, your advisor is full of it. Add a zero to get closer to our portfolio, and while it's definitely more complicated than a 3 fund portfolio, it's mostly in broad index funds. And when we were working, our annual investments were higher than your as well.
  • I'm disappointed in your advisor. Our Schwab rep. has never pushed using their management services.
  • To tax loss harvest, it's true you'll need more than 3 funds. But it doesn't add much complication. For example, use a total market fund and an S&P 500 index fund. That convers the domestic stock portion. The 3 fund portfolio is a fine approach consistent with Bogleheads principles, but Bogleheads principles (and Boghleheads) often have more than 3 funds (but not 50).
  • I would hold off on selling everything in the managed funds and intelliadvisor funds. Presumably you can keep what you have in them and just stop using those services. THEN come back and post what those holdings are, and get an idea of what to sell or not. There may be some keepers in there.
  • What marginal tax bracket are you in? That would help to determine if muni bonds are right for you.
  • Why can't you have bonds in your tax advantaged accounts?
* I see what I could use for the domestic portion. Would VEA + VXUS be good for the international portion? I'm also curious how rebalancing would work in such a portfolio. Would I rebalance according to each specific ETF's allocation, or would I broadly rebalance based on whether the ETF is for domestic or international? I hope my question makes sense.

* I don't think holding onto the managed portfolio's assets makes sense here given it's full of individual stock picks. The Schwab Robo advisor portfolio may make more sense, but I'm a little more biased towards Vanguard offerings out of preference. Plus some of the ETFs the robo advisor chose have relatively high expense ratios.

* I'm at 22% federal, 5.525% state

* I do have some bonds in my taxes advantaged accounts but they make up such a small portion of my overall portfolio that building that up wouldn't make a dent. For me to have the fixed income allocation I'm looking for, I'd need to use a taxable account.
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