Asking Portfolio Questions [Portfolio help request]

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
User avatar
retiredjg
Posts: 48716
Joined: Thu Jan 10, 2008 12:56 pm

Re: Asking Portfolio Questions [Portfolio help request]

Post by retiredjg »

Gennaro Dillinger wrote: Mon Jul 25, 2022 6:32 am I've been thinking, I'm already in retirement. I have a portion that is cash and CDs. If I invest everthing and then use the cash, it'll run out in several years give or take. If I have to start selling some of my investments, does it mean I shouldn't have gone to my 3-fund portfolio with everything - in stead keep more elsewhere? It would mean I didn't keep them at least 10 years, I'd start drawing down at least a little...
No it would not mean you didn't leave enough in cash.

There is no reason at all to avoid selling assets from your portfolio. And there is no reason to think about keeping something for 10 years.

You have a very large portfolio to spend from as you wish. When you've spent your entire life saving, it is hard to wrap your head around at first.

My suggestion is that you sell from your tiRAs and live on that in order to reduce the size of the tIRAs.
User avatar
Topic Author
Gennaro Dillinger
Posts: 82
Joined: Sat Jul 09, 2022 10:40 am

Re: Asking Portfolio Questions [Portfolio help request]

Post by Gennaro Dillinger »

Yes, actually. I've ended my relationship with my FA and am in the process of taking over the accounts now. The plan is in place thanks to everyone's help (a special thanks to Retiredjg who has been a champ. :D ) I have everything worked out into detail on what I'm going to do and in writing. I'm good to go except for execution. Thanks. I have one serious regret - I did not read up on this and cross paths with the Bogleheads decades ago.
User avatar
Topic Author
Gennaro Dillinger
Posts: 82
Joined: Sat Jul 09, 2022 10:40 am

Re: Asking Portfolio Questions [Portfolio help request]

Post by Gennaro Dillinger »

I have been harvesting losses, going well so far. I don't think there is any problem taking a short-term loss to cover a gain per the Wiki on tax loss harvesting. Is that right? I ask because I read an article online that vaguely disputed this point.

I have one of the IRAs all nicely reinvested. More to go once the sales clear...

Thanks!
User avatar
retiredjg
Posts: 48716
Joined: Thu Jan 10, 2008 12:56 pm

Re: Asking Portfolio Questions [Portfolio help request]

Post by retiredjg »

Short term losses are fine. Here is how I understand it works.

Short term losses offset short term gains. Long term losses offset long term gains. Whatever losses are left over (if any) offset whatever gains are left over (if any).

Any losses left over after all that can be used to offset up to $3k in ordinary income each year.

So while there may be a reason to avoid short term gains (if you have no short term losses to offset them), there is no reason to avoid short term losses because they will get used no matter what.

Someone who does this a lot may have some finer details to add. I have not done this in many years.

Glad to hear it is all going well.
User avatar
Topic Author
Gennaro Dillinger
Posts: 82
Joined: Sat Jul 09, 2022 10:40 am

Re: Asking Portfolio Questions [Portfolio help request]

Post by Gennaro Dillinger »

Thanks, again!! :happy
User avatar
Topic Author
Gennaro Dillinger
Posts: 82
Joined: Sat Jul 09, 2022 10:40 am

Re: Asking Portfolio Questions [Portfolio help request]

Post by Gennaro Dillinger »

Paying a tax cost to switch funds

Hi,

I wanted to use the template and plug in everything I'm left with after I finish taking losses and off-setting gains.

I now want to consider those items I might sell also but I am struggling a bit with the "Paying a tax cost to switch funds" wiki. I've downloaded the xlsx and have been playing with it but the rationale for some of the calculations still eludes me.

If I want to do this for some of my positions, how is the Total Return arrived at for each fund - 10 year trailing?

I assume tax on distributions at .30% is a ballpark for Fed and State?

Why are the distributions going to Fund B? Is that a BH-like fund and we don't want to keep reinvesting in one we are debating getting out of?

I assume for some items if the actual long-term gain is positive but not alot that it might just be worth selling it?

I assume LTCG at 15% is because no one would pay 20%?

Thanks!
User avatar
retiredjg
Posts: 48716
Joined: Thu Jan 10, 2008 12:56 pm

Re: Asking Portfolio Questions [Portfolio help request]

Post by retiredjg »

I can't help you with that at all. Have never used it.

If you want help with that spreadsheet, see if you can figure out who created it and ask them. Or, better yet, start a new thread about that one subject and ask for help in using it. Nobody will find that question buried deep in this thread (probably).

Looks like Grabiner is the poster to ask.
User avatar
Topic Author
Gennaro Dillinger
Posts: 82
Joined: Sat Jul 09, 2022 10:40 am

Re: Asking Portfolio Questions [Portfolio help request]

Post by Gennaro Dillinger »

Thanks!
User avatar
LadyGeek
Site Admin
Posts: 83946
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Asking Portfolio Questions [Portfolio help request]

Post by LadyGeek »

Gennaro Dillinger wrote: Thu Jul 28, 2022 3:07 pm Paying a tax cost to switch funds
FYI - It's best to keep all the information in one spot. You had a duplicate post (started a new thread), which I've removed. There were no replies.

(Thanks to the member who reported the post and explained what's wrong.)
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
User avatar
retiredjg
Posts: 48716
Joined: Thu Jan 10, 2008 12:56 pm

Re: Asking Portfolio Questions [Portfolio help request]

Post by retiredjg »

LadyGeek, this poster asked something about how to use a spreadsheet that he found in the Wiki. That is a new question and needs a new thread. In fact, he started the new thread because I suggested that he do that.

People who know how to use that spreadsheet are not involved in this thread and it is unlikely they will stumble on his question on page 3 of a thread about his portfolio questions.

Removing that new question is not going to help this poster.
User avatar
Topic Author
Gennaro Dillinger
Posts: 82
Joined: Sat Jul 09, 2022 10:40 am

Re: Asking Portfolio Questions [Portfolio help request]

Post by Gennaro Dillinger »

LadyGeek wrote: Thu Jul 28, 2022 3:41 pm
Gennaro Dillinger wrote: Thu Jul 28, 2022 3:07 pm Paying a tax cost to switch funds
FYI - It's best to keep all the information in one spot. You had a duplicate post (started a new thread), which I've removed. There were no replies.

(Thanks to the member who reported the post and explained what's wrong.)
Hi,
Thanks. I actually started a separate thread as Retiredjg pointed out to me no one would see it deep in this thread. Good weekend :happy
User avatar
LadyGeek
Site Admin
Posts: 83946
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Asking Portfolio Questions [Portfolio help request]

Post by LadyGeek »

Hi,

You're right. Sorry about that. I have restored your thread and clarified the thread title. See: Wiki question - Paying a tax cost to switch funds
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
User avatar
LadyGeek
Site Admin
Posts: 83946
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Asking Portfolio Questions [Portfolio help request]

Post by LadyGeek »

New member eotsk has a question which I've moved into a new thread. See: Is combining these bond funds equivalent to Vanguard Total Bond ETF?
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
User avatar
Topic Author
Gennaro Dillinger
Posts: 82
Joined: Sat Jul 09, 2022 10:40 am

Re: Asking Portfolio Questions [Portfolio help request]

Post by Gennaro Dillinger »

OK. So, here is where I am at:

Roth IRA – Gennaro – VTI 80%, VXUS 20%
Roth IRA – Mary – VTI 80%, VXUS 20%
tIRA – Gennaro – BND 100%
tIRA Mary – BND 100%

Taxable Account

The taxable account is going to need some consideration. I have taken any losses I can. I have used them to liquidate funds I was in, the order being from highest ER going down generally. I have used some of the cash and VTI/VXUS/BND are now about 44% of this account.

Now I am left with 6 fund positions which I have evaluated using the ‘paying a tax cost to switch funds’ tool. Looks like most of them are worth selling but for two the benefit seems negligible, and they happen to be Vanguard low cost funds.

This also leaves me with 29 stock positions totaling $1.6MM+ of which ~$1.1MM is gain. Obviously taking all the losses thinned the weak ones from the herd.

I am now left to strategize around what, how and when to; liquidate at least some of the funds and reinvest, Roth convert the tIRAs to some degree and evaluate and eliminate stock positions. I have kept about $0.5MM in cash while I am considering a path forward. I am dwelling on all the tax-impacting scenarios will allow within reason. As Retiredjg pointed out, I’m not going to get much done under 12%, I’m ok with that. Still, I’m trying to decide a best path forward.

Any comments, I’d appreciate it! As always, many thanks!!

P. S. I have to say I have been quite pleased with TDA’s website and customer service.
User avatar
retiredjg
Posts: 48716
Joined: Thu Jan 10, 2008 12:56 pm

Re: Asking Portfolio Questions [Portfolio help request]

Post by retiredjg »

I must say I am so impressed at how fast you can learn things and implement a plan. I've been here a long time and I don't recall anybody doing this as fast or as well as you have. It is just awesome to watch. :happy

If I understand correctly, you have 6 mutual funds and 29 individual stocks left in taxable. And you might want to do Roth conversions as well.

Are the 29 individual stocks well diversified?

I would need to go back through the whole thread to update my brain on your situation in order to make any further comments. Are there any specific questions you have?

Glad to hear that staying at TDA has worked out well for you.
User avatar
Topic Author
Gennaro Dillinger
Posts: 82
Joined: Sat Jul 09, 2022 10:40 am

Re: Asking Portfolio Questions [Portfolio help request]

Post by Gennaro Dillinger »

Thanks, Retiredjg. Don’t kill yourself going back through the thread. I can post a current summary of the situation so you don’t have any research to try and figure out what’s what.
User avatar
retiredjg
Posts: 48716
Joined: Thu Jan 10, 2008 12:56 pm

Re: Asking Portfolio Questions [Portfolio help request]

Post by retiredjg »

That would be helpful. :happy

I just want to be sure I don't confuse your "facts" with some other poster's "facts". It happens.
User avatar
Topic Author
Gennaro Dillinger
Posts: 82
Joined: Sat Jul 09, 2022 10:40 am

Re: Asking Portfolio Questions [Portfolio help request]

Post by Gennaro Dillinger »

Symbol Mkt value
AMZN 30,951.80
ARGX 36,785.00
BND 219,317.23
CARR 2,094.00
CIBR 75,684.00
EFG 12,891.00
FCOM 52,780.00
FDN 29,840.00
FTNT 27,439.20
GD 11,438.00
IDXX 20,796.78
IHI 65,160.00
IIPR 14,161.50
ILMN 19,915.53
IRDM 37,330.87
ISRG 25,233.60
LMT 21,320.50
MGC 144,710.00
NOC 23,879.50
PANW 34,023.80
PPA 64,117.44
RTX 4,651.00
SCHD 52,227.00
SCHW 27,793.31
TGT 21,746.00
TSLA 587,158.20
UNH 38,524.32
VAW 43,115.40
VTI 1,019,916.48
VXUS 39,780.00
XHE 59,178.00
XLP 59,712.00

Mutual Funds

Symbol Mkt value
BGRIX 58,452.99
BPTIX 186,862.98
SWHFX 102,662.81
VMIAX 44,881.29
VMVAX 91,750.04
VSMAX 70,141.80

About $466K cash at the moment. I may put this in a short CD or something until I get a grip on all else here.

Sorry, I couldn't figure how to upload a spreadsheet. Enough info?

We are in the window where there is no social security or RMDs coming in.

The big issue for me now is first deciding how much of a tax bite I’m willing to take and then how to work inside it. (I’m playing with some tools. Gonna check out New Retirement shortly.) Then I guess it'll be the same consideration for a number of years to come.

I guess I see the elimination of the funds with high ER as probably making most sense first. There is a guaranteed cost savings and the benefit of further consolidation in the 3-Fund model with the proceeds. Make sense?

I guess then some Roth conversion. Every way I have played with calculations around RMDs lead me to think we’ll hit it pretty good over a decade from now. I may not convert all – the tIRAs are all BND so at least the tax-deferred accounts are controlling that for now. So some portion of this will just be used for our monthly draw starting around 2030-something.

I think all the stock positions are not to be managed as they are all largely big gain items. I will be able to just use them to live on at some point but either way they are a huge chunk of all our investments and so keep us away from being 100% 3-fund. The upside is these were the best performing stocks we had, having realized losses on all else just recently. As part of this, our Tesla position is big and I’d like to reduce that, too. Not really sure how to manage this, have to research it. Any ideas or direction would be very welcome.

So I guess I’m wondering overall a best approach, as always to optimize things. I’m aware we’ll likely never be 100% 3-fund but I want to work towards it as logically and tax-efficiently as possible.

Thanks
User avatar
Topic Author
Gennaro Dillinger
Posts: 82
Joined: Sat Jul 09, 2022 10:40 am

Re: Asking Portfolio Questions [Portfolio help request]

Post by Gennaro Dillinger »

Gennaro Dillinger wrote: Fri Aug 05, 2022 8:48 pm Symbol Mkt value
AMZN 30,951.80
ARGX 36,785.00
BND 219,317.23
CARR 2,094.00
CIBR 75,684.00
EFG 12,891.00
FCOM 52,780.00
FDN 29,840.00
FTNT 27,439.20
GD 11,438.00
IDXX 20,796.78
IHI 65,160.00
IIPR 14,161.50
ILMN 19,915.53
IRDM 37,330.87
ISRG 25,233.60
LMT 21,320.50
MGC 144,710.00
NOC 23,879.50
PANW 34,023.80
PPA 64,117.44
RTX 4,651.00
SCHD 52,227.00
SCHW 27,793.31
TGT 21,746.00
TSLA 587,158.20
UNH 38,524.32
VAW 43,115.40
VTI 1,019,916.48
VXUS 39,780.00
XHE 59,178.00
XLP 59,712.00

Mutual Funds

Symbol Mkt value
BGRIX 58,452.99
BPTIX 186,862.98
SWHFX 102,662.81
VMIAX 44,881.29
VMVAX 91,750.04
VSMAX 70,141.80

About $466K cash at the moment. I may put this in a short CD or something until I get a grip on all else here.

Sorry, I couldn't figure how to upload a spreadsheet. Enough info?

We are in the window where there is no social security or RMDs coming in.

The big issue for me now is first deciding how much of a tax bite I’m willing to take and then how to work inside it. (I’m playing with some tools. Gonna check out New Retirement shortly.) Then I guess it'll be the same consideration for a number of years to come.

I guess I see the elimination of the funds with high ER as probably making most sense first. There is a guaranteed cost savings and the benefit of further consolidation in the 3-Fund model with the proceeds. Make sense?

I guess then some Roth conversion. Every way I have played with calculations around RMDs lead me to think we’ll hit it pretty good over a decade from now. I may not convert all – the tIRAs are all BND so at least the tax-deferred accounts are controlling that for now. So some portion of this will just be used for our monthly draw starting around 2030-something.

I think all the stock positions are not to be managed as they are all largely big gain items. I will be able to just use them to live on at some point but either way they are a huge chunk of all our investments and so keep us away from being 100% 3-fund. The upside is these were the best performing stocks we had, having realized losses on all else just recently. As part of this, our Tesla position is big and I’d like to reduce that, too. Not really sure how to manage this, have to research it. Any ideas or direction would be very welcome.

So I guess I’m wondering overall a best approach, as always to optimize things. I’m aware we’ll likely never be 100% 3-fund but I want to work towards it as logically and tax-efficiently as possible.

Thanks
I've decided to keep the three Vanguard funds.
User avatar
retiredjg
Posts: 48716
Joined: Thu Jan 10, 2008 12:56 pm

Re: Asking Portfolio Questions [Portfolio help request]

Post by retiredjg »

I would keep the 3 Vanguard funds. They are not hurting anything (they are tax-efficient and low cost) other than adding a bit of clutter to the portfolio. There is certainly no urgency to get rid of them.

As for the other 3...I would sell them. The high cost and the extra taxes (because they are actively managed) makes them not worth having in my opinion. And apparently, the tax cost calculator says the break even time is pretty short.

Having said that....they don't have to be sold this year.

Earlier I had suggested that you do a "larger" Roth conversion this year if Mary does not turn 63 this year (you never have said when she turns 63). If you are going to do that, you may want to wait until next year to sell these 3 mutual funds.

If I understand your income correctly, you will only be able to sell something like $70k worth of cap gains in the 0% tax bracket. Since you have more than $1 million in gains, that's hardly a drop in the bucket.

What are your thoughts now about "cleaning up" vs Roth conversions?
User avatar
retiredjg
Posts: 48716
Joined: Thu Jan 10, 2008 12:56 pm

Re: Asking Portfolio Questions [Portfolio help request]

Post by retiredjg »

I don't see any reason you should not go ahead and invest all or good portion of that $466k in cash.

You apparently want a portfolio that is about 48% US stocks, 12% foreign stocks, and 40% bonds/other fixed income assets (like cash or CDs).

Assuming all of your individual stocks are US, what you are lacking right now is about $300k in bonds/fixed and about $600k in foreign stocks.

You can't accomplish all that with $466k in cash. The stock to bond ratio is by far the most important one to achieve. I'd put a good chunk of that cash into some kind of bond fund, CD, cash holding and put the rest into VXUS.

Also exchange both Roth IRAs into VXUS. Doing all of these things is not going to get your international allocation up to 20% but it at least heads in the right direction.

Remember, since you are holding the same exact funds in taxable, rollover IRA and Roth IRA, you are going to have to be cognizant of wash sales. You said you know how to avoid that. Just remember to do it.
User avatar
Topic Author
Gennaro Dillinger
Posts: 82
Joined: Sat Jul 09, 2022 10:40 am

Re: Asking Portfolio Questions [Portfolio help request]

Post by Gennaro Dillinger »

retiredjg wrote: Sat Aug 06, 2022 10:28 am I would keep the 3 Vanguard funds. They are not hurting anything (they are tax-efficient and low cost) other than adding a bit of clutter to the portfolio. There is certainly no urgency to get rid of them.

As for the other 3...I would sell them. The high cost and the extra taxes (because they are actively managed) makes them not worth having in my opinion. And apparently, the tax cost calculator says the break even time is pretty short.

Having said that....they don't have to be sold this year.

Earlier I had suggested that you do a "larger" Roth conversion this year if Mary does not turn 63 this year (you never have said when she turns 63). If you are going to do that, you may want to wait until next year to sell these 3 mutual funds.

If I understand your income correctly, you will only be able to sell something like $70k worth of cap gains in the 0% tax bracket. Since you have more than $1 million in gains, that's hardly a drop in the bucket.

What are your thoughts now about "cleaning up" vs Roth conversions?
Yes, Mary turns 63 this year. Is your concern the impact on IRMAA payments? If so, not sure if delaying it makes a difference as she'll always be in the IRMAA window after this point.

Yes, I have no problem waiting to sell the other three funds later and I'm happy to keep the 3 other Vanguard funds indefinitely.

I assume you are of my mindset on the other stocks? Probably not much I can do now but leave them and use them as needed or harvest a loss at some later point regardless of how likely that would be.

It seems now Roth conversion might be better.

Thanks!!
User avatar
Topic Author
Gennaro Dillinger
Posts: 82
Joined: Sat Jul 09, 2022 10:40 am

Re: Asking Portfolio Questions [Portfolio help request]

Post by Gennaro Dillinger »

retiredjg wrote: Sat Aug 06, 2022 10:54 am I don't see any reason you should not go ahead and invest all or good portion of that $466k in cash.

You apparently want a portfolio that is about 48% US stocks, 12% foreign stocks, and 40% bonds/other fixed income assets (like cash or CDs).

Assuming all of your individual stocks are US, what you are lacking right now is about $300k in bonds/fixed and about $600k in foreign stocks.

You can't accomplish all that with $466k in cash. The stock to bond ratio is by far the most important one to achieve. I'd put a good chunk of that cash into some kind of bond fund, CD, cash holding and put the rest into VXUS.

Also exchange both Roth IRAs into VXUS. Doing all of these things is not going to get your international allocation up to 20% but it at least heads in the right direction.

Remember, since you are holding the same exact funds in taxable, rollover IRA and Roth IRA, you are going to have to be cognizant of wash sales. You said you know how to avoid that. Just remember to do it.
All great suggestions, thanks. I'm tweaking scenarios in my spreadsheet now. I also am talking with my tax guy Monday - which is why I was hesitant to move any more cash at the moment.

I'll be watching for the wash, not worried right now (even though I have those set to auto-reinvest) as I have no intention of selling anything from those funds at the moment.

Many thanks
User avatar
retiredjg
Posts: 48716
Joined: Thu Jan 10, 2008 12:56 pm

Re: Asking Portfolio Questions [Portfolio help request]

Post by retiredjg »

Gennaro Dillinger wrote: Sat Aug 06, 2022 3:28 pm
retiredjg wrote: Sat Aug 06, 2022 10:28 am I would keep the 3 Vanguard funds. They are not hurting anything (they are tax-efficient and low cost) other than adding a bit of clutter to the portfolio. There is certainly no urgency to get rid of them.

As for the other 3...I would sell them. The high cost and the extra taxes (because they are actively managed) makes them not worth having in my opinion. And apparently, the tax cost calculator says the break even time is pretty short.

Having said that....they don't have to be sold this year.

Earlier I had suggested that you do a "larger" Roth conversion this year if Mary does not turn 63 this year (you never have said when she turns 63). If you are going to do that, you may want to wait until next year to sell these 3 mutual funds.

If I understand your income correctly, you will only be able to sell something like $70k worth of cap gains in the 0% tax bracket. Since you have more than $1 million in gains, that's hardly a drop in the bucket.

What are your thoughts now about "cleaning up" vs Roth conversions?
Yes, Mary turns 63 this year. Is your concern the impact on IRMAA payments? If so, not sure if delaying it makes a difference as she'll always be in the IRMAA window after this point.
Yes. I thought this might be the last year you could do a "larger" Roth conversion without triggering IRMAA. But If she turns 63 this year, that won't work out as well. On the other hand, if she turns 63 later in the year, that would only trigger IRMAA for the last few months of the year (which might be no big deal).

And many people go ahead and just pay the IRMAA and don't worry about it. None of us pay anywhere near the full cost of our Medicare coverage. Paying something more than the lowest rate is not something that must be avoided in my book.

I assume you are of my mindset on the other stocks? Probably not much I can do now but leave them and use them as needed or harvest a loss at some later point regardless of how likely that would be.
Yes. Until we have a significant downturn, you will not be able to get rid of those stocks cheaply. I would not worry about it. You have done a good job of getting rid of the worst offenders. The stocks that are left are diversified, you have more money than you need so if one goes bust it will not affect you much, and you have a good portion if your money in the "core funds". Unless they just bother you, I don't need a need to get rid of them since it will be costly to do so.
Post Reply