New Portfolio Help
-
- Posts: 8
- Joined: Sat Jan 11, 2020 11:46 am
New Portfolio Help
Emergency Funds: >6 months worth in Ally savings
Debt: no debt
Tax Filing Status: Single
Tax Rate: 32% Federal, 9.9% State
State of Residence: Oregon
Age: Low 30's
Desired Asset allocation: 80-90% stocks/ 10-20% bonds
Taxable:
Low six-figures (55%)
15% WCM Focused International Growth Mutual Fund Class Institutional (WCMIX) (1.06)
13% SPDR S&P 500 ETF Trust (SPY) (.09)
10% Ishares Russell Mid Cap (IWR) (.18)
10% JP Morgan Large Cap Growth Mutual Fund Class R6 (JLGMX) (.44)
8% MainStay MacKay High Yield Corporate Bond Fund Class R6 (MHYSX) (.56)
8% Technology Select Sector SPDR Fund (XLK) (.10)
7% iShares MSCI Emerging Markets ETF (EEM) (.68)
7% Vanguard 500 Index Fund Admiral Shares(VFIAX) (.04)
7% Consumer Discretionary Select Sector SPDR Fund (XLY) (.01)
4% Invesco Real Estate Fund Class R6 (IARFX) (.78)
4% T Rowe Price New Income Mutual Fund Class I (PRXEX) (.35)
3% PIMCO Investment Grade Credit Bond Fund Institutional Class (PIGIX) (.35)
3% JP Morgan Small Cap Growth Mutual Fund Class R6 (JGSMX) (.74)
401K:
High five-figures (33%)
100% Fidelity 500 Index Fund (FXAIX) (.02)
ROTH IRA:
Low five-figures (11%)
100% Vanguard 500 Index Fund Admiral Shares (VFIAX) (.04)
_______________________________________________________________
Questions:
1. I recently finished grad school and am now just trying to get my finances in order. Several years ago (late 2019) I took some of my savings to an investment banker who invested it into the taxable account you see; nothing has been bought/changed since then. It seems to me that some have very high expense ratios as well as a lot of overlap. What are your thoughts on these funds? I like the thought of diversification, but don't want 'unnecessary' funds.
2. I am actually in-between jobs right now and expect a very big change (decrease) in taxes for next year. If you recommend selling some of these off, would you do it this year, next year, or slowly over the course of several years.
Thank you!
Debt: no debt
Tax Filing Status: Single
Tax Rate: 32% Federal, 9.9% State
State of Residence: Oregon
Age: Low 30's
Desired Asset allocation: 80-90% stocks/ 10-20% bonds
Taxable:
Low six-figures (55%)
15% WCM Focused International Growth Mutual Fund Class Institutional (WCMIX) (1.06)
13% SPDR S&P 500 ETF Trust (SPY) (.09)
10% Ishares Russell Mid Cap (IWR) (.18)
10% JP Morgan Large Cap Growth Mutual Fund Class R6 (JLGMX) (.44)
8% MainStay MacKay High Yield Corporate Bond Fund Class R6 (MHYSX) (.56)
8% Technology Select Sector SPDR Fund (XLK) (.10)
7% iShares MSCI Emerging Markets ETF (EEM) (.68)
7% Vanguard 500 Index Fund Admiral Shares(VFIAX) (.04)
7% Consumer Discretionary Select Sector SPDR Fund (XLY) (.01)
4% Invesco Real Estate Fund Class R6 (IARFX) (.78)
4% T Rowe Price New Income Mutual Fund Class I (PRXEX) (.35)
3% PIMCO Investment Grade Credit Bond Fund Institutional Class (PIGIX) (.35)
3% JP Morgan Small Cap Growth Mutual Fund Class R6 (JGSMX) (.74)
401K:
High five-figures (33%)
100% Fidelity 500 Index Fund (FXAIX) (.02)
ROTH IRA:
Low five-figures (11%)
100% Vanguard 500 Index Fund Admiral Shares (VFIAX) (.04)
_______________________________________________________________
Questions:
1. I recently finished grad school and am now just trying to get my finances in order. Several years ago (late 2019) I took some of my savings to an investment banker who invested it into the taxable account you see; nothing has been bought/changed since then. It seems to me that some have very high expense ratios as well as a lot of overlap. What are your thoughts on these funds? I like the thought of diversification, but don't want 'unnecessary' funds.
2. I am actually in-between jobs right now and expect a very big change (decrease) in taxes for next year. If you recommend selling some of these off, would you do it this year, next year, or slowly over the course of several years.
Thank you!
Last edited by BsInvestor on Fri Oct 07, 2022 11:10 pm, edited 1 time in total.
Re: New Portfolio Help
What is the amount you can liquidate in your taxable account, without incurring any capital gains? Surely some of the lots you have there have losses, and some gains. S&P 500 is about the same level now when it was last at October 2020, so every lot purchased since then (dividend reinvestments and any churn your investment banker did) would have losses -- that could be offset with any gains on lots acquired before then. Those bond funds also are likely to have serious losses.
I would shift, in that order, one day at a time:
1. Shift everything in the 401k to a bond fund or a relatively short horizon target fund, say Vanguard Target Retirement 2035 fund
2. Shift everything in the Roth IRA to an international stock fund like VTIAX /VXUS or a long horizon target date fund (say Vanguard Target Retirement 2065)
3. Everything you can liquidate in taxable account without realizing any net capital gain, shall be liquidated and buy VTSAX or VTI. There isn't a more diversified ETF or mutual fund than this. Lots of funds do not mean diversification.
Steps 1 and 2 are recommended first because of tax loss harvesting wash sales rules. You have overlap of S&P 500 index funds in all three, so I am suggesting to move them away from a 500 index fund (when you go to sell in the taxable account, there won't be 'replacement shares' present in any account).
You have about 7% in your taxable portfolio in international funds, which I think approximately equals the balance in your Roth IRA, so shifting Roth to international stocks and selling your stake in taxable leaves you net with same exposure as before. Reason for recommending Step 2.
Bond funds are best held in 401k type accounts (tax efficiency reasons), and given your desired asset allocation, looks to me that you can keep the same exposure by shifting your 401k to bond funds. Reason for recommending Step 1.
I would shift, in that order, one day at a time:
1. Shift everything in the 401k to a bond fund or a relatively short horizon target fund, say Vanguard Target Retirement 2035 fund
2. Shift everything in the Roth IRA to an international stock fund like VTIAX /VXUS or a long horizon target date fund (say Vanguard Target Retirement 2065)
3. Everything you can liquidate in taxable account without realizing any net capital gain, shall be liquidated and buy VTSAX or VTI. There isn't a more diversified ETF or mutual fund than this. Lots of funds do not mean diversification.
Steps 1 and 2 are recommended first because of tax loss harvesting wash sales rules. You have overlap of S&P 500 index funds in all three, so I am suggesting to move them away from a 500 index fund (when you go to sell in the taxable account, there won't be 'replacement shares' present in any account).
You have about 7% in your taxable portfolio in international funds, which I think approximately equals the balance in your Roth IRA, so shifting Roth to international stocks and selling your stake in taxable leaves you net with same exposure as before. Reason for recommending Step 2.
Bond funds are best held in 401k type accounts (tax efficiency reasons), and given your desired asset allocation, looks to me that you can keep the same exposure by shifting your 401k to bond funds. Reason for recommending Step 1.
- ruralavalon
- Posts: 26297
- Joined: Sat Feb 02, 2008 9:29 am
- Location: Illinois
Re: New Portfolio Help
Welcome to the forum .
Congratulations on finishing grad school.
It's great to see that your debt free, and are using very diversified, low cost index funds in your tax-advantaged accounts.
You are right to want to simplify and to use funds with low expense ratios,
Do you know what funds will be available in your new employer's plan?
You can simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.
I suggest selling the taxable bond funds, income fund and real estate fund as follows:
MainStay MacKay High Yield Corporate Bond Fund Class R6 (MHYSX) (.56)
. . . . .
Invesco Real Estate Fund Class R6 (IARFX) (.78)T Rowe Price New Income Mutual Fund Class I (PRXEX) (.35)
PIMCO Investment Grade Credit Bond Fund Institutional Class (PIGIX) (.35).
The taxable bond funds and income fund are not very tax-efficient, and the real estate fund is very tax-INefficient.
I also suggest selling these funds, because less tax-efficient, less diversified, with higher expense ratios:
WCM Focused International Growth Mutual Fund Class Institutional (WCMIX) (1.06) . . . . .
10% Ishares Russell Mid Cap (IWR) (.18)
10% JP Morgan Large Cap Growth Mutual Fund Class R6 (JLGMX) (.44)
. . . . .
4% T Rowe Price New Income Mutual Fund Class I (PRXEX) (.35)
. . . . .
3% JP Morgan Small Cap Growth Mutual Fund Class R6 (JGSMX) (.74).
These very diversified stock index funds are very tax-efficient and good choices for your taxable brokerage account:
SPDR S&P 500 ETF Trust (SPY) (.09)
. . . . .
7% Vanguard 500 Index Fund Admiral Shares(VFIAX) (.04)
In my opinion you would be wise to keep these very diversified, low cost stock index funds.
Wiki article Tax-efficient fund placement.
(Do you instead mean that this year, since between jobs, you will have the very large decrease in income?)
Here are ideas on how to reduce any income tax liability for any capital gains.
Immediately turn off any automatic reinvestment of distributions in any fund you do not wish to keep. Don't buy additional shares of funds you want to get rid of.
Sell shares of any funds in which you have an UNrealized capital loss. Sell an equal dollar amount of shares of funds in which you have an UNrealized capital gain.
I hope that this helps.
For some education on investing basics, please read the wiki article "Bogleheads® investment philosophy". See the link I give below.
Congratulations on finishing grad school.
It's great to see that your debt free, and are using very diversified, low cost index funds in your tax-advantaged accounts.
You are right to want to simplify and to use funds with low expense ratios,
In my opinion your desired asset allocation is within the range of what is reasonable.BsInvestor wrote: ↑Thu Oct 06, 2022 11:45 am Emergency Funds: >6 months worth in Ally savings
Debt: no debt
Tax Filing Status: Single
Tax Rate: 32% Federal, 9.9% State
State of Residence: Oregon
Age: Low 30's
Desired Asset allocation: 80-90% stocks/ 10-20% bonds
What proportion (either percentages or dollar amounts) of the total portfolio is in each account?BsInvestor wrote: ↑Thu Oct 06, 2022 11:45 amTaxable:
Low six-figures
15% WCM Focused International Growth Mutual Fund Class Institutional (WCMIX) (1.06)
13% SPDR S&P 500 ETF Trust (SPY) (.09)
10% Ishares Russell Mid Cap (IWR) (.18)
10% JP Morgan Large Cap Growth Mutual Fund Class R6 (JLGMX) (.44)
8% MainStay MacKay High Yield Corporate Bond Fund Class R6 (MHYSX) (.56)
8% Technology Select Sector SPDR Fund (XLK) (.10)
7% iShares MSCI Emerging Markets ETF (EEM) (.68)
7% Vanguard 500 Index Fund Admiral Shares(VFIAX) (.04)
7% Consumer Discretionary Select Sector SPDR Fund (XLY) (.01)
4% Invesco Real Estate Fund Class R6 (IARFX) (.78)
4% T Rowe Price New Income Mutual Fund Class I (PRXEX) (.35)
3% PIMCO Investment Grade Credit Bond Fund Institutional Class (PIGIX) (.35)
3% JP Morgan Small Cap Growth Mutual Fund Class R6 (JGSMX) (.74).
401K:
High five-figures
100% Fidelity 500 Index Fund (FXAIX) (.02)
ROTH IRA:
Low five-figures
100% Vanguard 500 Index Fund Admiral Shares (VFIAX) (.04)
Do you know what funds will be available in your new employer's plan?
You can simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.
Immediately turn off any automatic reinvestment of distributions in any fund you do not wish to keep. Don't buy additional shares of funds you want to get rid of.BsInvestor wrote: ↑Thu Oct 06, 2022 11:45 amQuestions:
1. I recently finished grad school and am now just trying to get my finances in order. Several years ago (late 2019) I took some of my savings to an investment banker who invested it into the taxable account you see; nothing has been bought/changed since then. It seems to me that some have very high expense ratios as well as a lot of overlap. What are your thoughts on these funds? I like the thought of diversification, but don't want 'unnecessary' funds.
I suggest selling the taxable bond funds, income fund and real estate fund as follows:
MainStay MacKay High Yield Corporate Bond Fund Class R6 (MHYSX) (.56)
. . . . .
Invesco Real Estate Fund Class R6 (IARFX) (.78)T Rowe Price New Income Mutual Fund Class I (PRXEX) (.35)
PIMCO Investment Grade Credit Bond Fund Institutional Class (PIGIX) (.35).
The taxable bond funds and income fund are not very tax-efficient, and the real estate fund is very tax-INefficient.
I also suggest selling these funds, because less tax-efficient, less diversified, with higher expense ratios:
WCM Focused International Growth Mutual Fund Class Institutional (WCMIX) (1.06) . . . . .
10% Ishares Russell Mid Cap (IWR) (.18)
10% JP Morgan Large Cap Growth Mutual Fund Class R6 (JLGMX) (.44)
. . . . .
4% T Rowe Price New Income Mutual Fund Class I (PRXEX) (.35)
. . . . .
3% JP Morgan Small Cap Growth Mutual Fund Class R6 (JGSMX) (.74).
These very diversified stock index funds are very tax-efficient and good choices for your taxable brokerage account:
SPDR S&P 500 ETF Trust (SPY) (.09)
. . . . .
7% Vanguard 500 Index Fund Admiral Shares(VFIAX) (.04)
In my opinion you would be wise to keep these very diversified, low cost stock index funds.
Wiki article Tax-efficient fund placement.
Yes, next year with the very big decrease in income would be a good time to make changes in your taxable brokerage account.BsInvestor wrote: ↑Thu Oct 06, 2022 11:45 am2. I am actually in-between jobs right now and expect a very big change (decrease) in taxes for next year. If you recommend selling some of these off, would you do it this year, next year, or slowly over the course of several years.
Thank you!
(Do you instead mean that this year, since between jobs, you will have the very large decrease in income?)
Here are ideas on how to reduce any income tax liability for any capital gains.
Immediately turn off any automatic reinvestment of distributions in any fund you do not wish to keep. Don't buy additional shares of funds you want to get rid of.
Sell shares of any funds in which you have an UNrealized capital loss. Sell an equal dollar amount of shares of funds in which you have an UNrealized capital gain.
I hope that this helps.
For some education on investing basics, please read the wiki article "Bogleheads® investment philosophy". See the link I give below.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
-
- Posts: 8
- Joined: Sat Jan 11, 2020 11:46 am
Re: New Portfolio Help
Thank you for the response. Just to clarify and make sure I get your recommendations:lakpr wrote: ↑Thu Oct 06, 2022 3:51 pm What is the amount you can liquidate in your taxable account, without incurring any capital gains? Surely some of the lots you have there have losses, and some gains. S&P 500 is about the same level now when it was last at October 2020, so every lot purchased since then (dividend reinvestments and any churn your investment banker did) would have losses -- that could be offset with any gains on lots acquired before then. Those bond funds also are likely to have serious losses.
I would shift, in that order, one day at a time:
1. Shift everything in the 401k to a bond fund or a relatively short horizon target fund, say Vanguard Target Retirement 2035 fund
2. Shift everything in the Roth IRA to an international stock fund like VTIAX /VXUS or a long horizon target date fund (say Vanguard Target Retirement 2065)
3. Everything you can liquidate in taxable account without realizing any net capital gain, shall be liquidated and buy VTSAX or VTI. There isn't a more diversified ETF or mutual fund than this. Lots of funds do not mean diversification.
Steps 1 and 2 are recommended first because of tax loss harvesting wash sales rules. You have overlap of S&P 500 index funds in all three, so I am suggesting to move them away from a 500 index fund (when you go to sell in the taxable account, there won't be 'replacement shares' present in any account).
You have about 7% in your taxable portfolio in international funds, which I think approximately equals the balance in your Roth IRA, so shifting Roth to international stocks and selling your stake in taxable leaves you net with same exposure as before. Reason for recommending Step 2.
Bond funds are best held in 401k type accounts (tax efficiency reasons), and given your desired asset allocation, looks to me that you can keep the same exposure by shifting your 401k to bond funds. Reason for recommending Step 1.
Steps 1 and 2 are to help keep my asset allocation (bond funds and international funds portion) in line with my desired percent allocation, as well as keeping them in the most tax efficient accounts.
For step 3: Aren't SPY and VFIAX very comparable to VTSAX? Not including those 2 I actually have almost equal gains and losses at this time, in which case you would recommend selling everything (keeping gains and losses as equal as possible) and moving them towards VTSAX?
-
- Posts: 8
- Joined: Sat Jan 11, 2020 11:46 am
Re: New Portfolio Help
Thank you for the response. After some research, I thought a lot of the funds I was in were either high in expense ratios, or just seemed unnecessary and inefficient, but I wanted to get other people's opinion, so thank you for verifying that.ruralavalon wrote: ↑Thu Oct 06, 2022 4:29 pm Welcome to the forum .
Congratulations on finishing grad school.
It's great to see that your debt free, and are using very diversified, low cost index funds in your tax-advantaged accounts.
You are right to want to simplify and to use funds with low expense ratios,
In my opinion your desired asset allocation is within the range of what is reasonable.BsInvestor wrote: ↑Thu Oct 06, 2022 11:45 am Emergency Funds: >6 months worth in Ally savings
Debt: no debt
Tax Filing Status: Single
Tax Rate: 32% Federal, 9.9% State
State of Residence: Oregon
Age: Low 30's
Desired Asset allocation: 80-90% stocks/ 10-20% bonds
What proportion (either percentages or dollar amounts) of the total portfolio is in each account?BsInvestor wrote: ↑Thu Oct 06, 2022 11:45 amTaxable:
Low six-figures
15% WCM Focused International Growth Mutual Fund Class Institutional (WCMIX) (1.06)
13% SPDR S&P 500 ETF Trust (SPY) (.09)
10% Ishares Russell Mid Cap (IWR) (.18)
10% JP Morgan Large Cap Growth Mutual Fund Class R6 (JLGMX) (.44)
8% MainStay MacKay High Yield Corporate Bond Fund Class R6 (MHYSX) (.56)
8% Technology Select Sector SPDR Fund (XLK) (.10)
7% iShares MSCI Emerging Markets ETF (EEM) (.68)
7% Vanguard 500 Index Fund Admiral Shares(VFIAX) (.04)
7% Consumer Discretionary Select Sector SPDR Fund (XLY) (.01)
4% Invesco Real Estate Fund Class R6 (IARFX) (.78)
4% T Rowe Price New Income Mutual Fund Class I (PRXEX) (.35)
3% PIMCO Investment Grade Credit Bond Fund Institutional Class (PIGIX) (.35)
3% JP Morgan Small Cap Growth Mutual Fund Class R6 (JGSMX) (.74).
401K:
High five-figures
100% Fidelity 500 Index Fund (FXAIX) (.02)
ROTH IRA:
Low five-figures
100% Vanguard 500 Index Fund Admiral Shares (VFIAX) (.04)
Do you know what funds will be available in your new employer's plan?
You can simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.
Immediately turn off any automatic reinvestment of distributions in any fund you do not wish to keep. Don't buy additional shares of funds you want to get rid of.BsInvestor wrote: ↑Thu Oct 06, 2022 11:45 amQuestions:
1. I recently finished grad school and am now just trying to get my finances in order. Several years ago (late 2019) I took some of my savings to an investment banker who invested it into the taxable account you see; nothing has been bought/changed since then. It seems to me that some have very high expense ratios as well as a lot of overlap. What are your thoughts on these funds? I like the thought of diversification, but don't want 'unnecessary' funds.
I suggest selling the taxable bond funds, income fund and real estate fund as follows:
MainStay MacKay High Yield Corporate Bond Fund Class R6 (MHYSX) (.56)
. . . . .
Invesco Real Estate Fund Class R6 (IARFX) (.78)T Rowe Price New Income Mutual Fund Class I (PRXEX) (.35)
PIMCO Investment Grade Credit Bond Fund Institutional Class (PIGIX) (.35).
The taxable bond funds and income fund are not very tax-efficient, and the real estate fund is very tax-INefficient.
I also suggest selling these funds, because less tax-efficient, less diversified, with higher expense ratios:
WCM Focused International Growth Mutual Fund Class Institutional (WCMIX) (1.06) . . . . .
10% Ishares Russell Mid Cap (IWR) (.18)
10% JP Morgan Large Cap Growth Mutual Fund Class R6 (JLGMX) (.44)
. . . . .
4% T Rowe Price New Income Mutual Fund Class I (PRXEX) (.35)
. . . . .
3% JP Morgan Small Cap Growth Mutual Fund Class R6 (JGSMX) (.74).
These very diversified stock index funds are very tax-efficient and good choices for your taxable brokerage account:
SPDR S&P 500 ETF Trust (SPY) (.09)
. . . . .
7% Vanguard 500 Index Fund Admiral Shares(VFIAX) (.04)
In my opinion you would be wise to keep these very diversified, low cost stock index funds.
Wiki article Tax-efficient fund placement.
Yes, next year with the very big decrease in income would be a good time to make changes in your taxable brokerage account.BsInvestor wrote: ↑Thu Oct 06, 2022 11:45 am2. I am actually in-between jobs right now and expect a very big change (decrease) in taxes for next year. If you recommend selling some of these off, would you do it this year, next year, or slowly over the course of several years.
Thank you!
(Do you instead mean that this year, since between jobs, you will have the very large decrease in income?)
Here are ideas on how to reduce any income tax liability for any capital gains.
Immediately turn off any automatic reinvestment of distributions in any fund you do not wish to keep. Don't buy additional shares of funds you want to get rid of.
Sell shares of any funds in which you have an UNrealized capital loss. Sell an equal dollar amount of shares of funds in which you have an UNrealized capital gain.
I hope that this helps.
For some education on investing basics, please read the wiki article "Bogleheads® investment philosophy". See the link I give below.
It seems like both you and u/lakpr are recommending to sell essentially everything in my taxable account, while keeping gains/losses equal, and moving it towards either VFIAX or VTSAX, which I do like the idea of. Under your recommendation on which funds to sell, I would have more losses than gains though. What is the recommendation on selling in that situation then? Save some losses for next year?
Yes, I am in between jobs this year and my income has decreased significantly, so you would recommend making these changes now correct?
- ruralavalon
- Posts: 26297
- Joined: Sat Feb 02, 2008 9:29 am
- Location: Illinois
Re: New Portfolio Help
Both SPY and VFIAX are S&P 500 index funds. That type of index fund has had almost identical performance to Vanguard Total Stock Market Index Fund over the 30 years since the creation of the first share class of the total stock market index fund.BsInvestor wrote: ↑Fri Oct 07, 2022 12:31 amAren't SPY and VFIAX very comparable to VTSAX? Not including those 2 I actually have almost equal gains and losses at this time, in which case you would recommend selling everything (keeping gains and losses as equal as possible) and moving them towards VTSAX?
Portfolio Visualizer, 1993-2022. I used the oldest share classes to get the longest period for comparison. Some years one fund type was a little ahead, some years the other did a little better.
In general I prefer a total stock market index fund over a S&P 500 index fund because a little more diversified. So I would use the proceeds of sales of funds in the taxable account to buy some Vanguard Total Stock Market Index Fund (VTSAX).BsInvestor wrote: ↑Fri Oct 07, 2022 12:48 amIt seems like both you and u/lakpr are recommending to sell essentially everything in my taxable account, while keeping gains/losses equal, and moving it towards either VFIAX or VTSAX, which I do like the idea of. Under your recommendation on which funds to sell, I would have more losses than gains though. What is the recommendation on selling in that situation then? Save some losses for next year?
Yes, I am in between jobs this year and my income has decreased significantly, so you would recommend making these changes now correct?
But I would not sell SPY or VFIAX to buy VTSAX if that created any significant income tax liability.
If you want an international stock allocation, then consider also buying some Vanguard Total International Stock Index Fund (VTIAX) in your taxable brokerage account. Both VTSAX and VTIAX are very tax-efficient, and diversified with very low expense ratios.
You need to plan out what you wish to hold in each account before executing any change in your taxable brokerage account. It's usually best to treat all accounts together as a single unified portfolio, rather than treat each account separately.
What proportion (either percentages or dollar amounts) of the total portfolio is in each account?
About how much do you believe you may be able to contribute annually to investing (total, all accounts)?
Do you know what funds will be available in your new employer's plan? Please give fund names, tickers and expense ratios.
Do you wish to have an allocation to international stocks?
You can simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.
. . . . . .
I am not a tax expert, I don't even prepare my own tax returns.
If you realize more capital losses than gains then you can carry forward the losses to offset some income in future years. Investopedia, "Capital Losses and Tax", link. Wiki article Tax loss harvesting.
Before taking any action, please read the entire linked Investopedia article, the entire wiki article, and "download the Schedule D instructions from the IRS website at www.irs.gov". It's probably a good idea to consult a CPA or tax attorney about this.
I am not a tax expert, I don't even prepare my own tax returns.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
Re: New Portfolio Help
Poster @ruralavalon already answered this question above, but let me explain my reasoning in a bit more detail in this reply. Yes, they are very comparable to VTSAX, and the returns have been pretty consistent over the last 30 years. If it means realizing unrealized capital gains that aren't offset by losses (and thus incurring a tax liability), I would not suggest selling them either.BsInvestor wrote: ↑Fri Oct 07, 2022 12:31 am For step 3: Aren't SPY and VFIAX very comparable to VTSAX? Not including those 2 I actually have almost equal gains and losses at this time, in which case you would recommend selling everything (keeping gains and losses as equal as possible) and moving them towards VTSAX?
The reason for my preference for VTSAX in taxable is that it is more diversified than just the 500 index (500 companies vs. 3500 companies), and I noticed that you did not have it anywhere in your portfolio yet. For tax-loss-harvest reasons, when you sell something for a loss, you should not have any replacement shares that were bought within the last 30 days and the next 30 days (so a total period of 61 days including the day of sale). I assumed these lots will have losses (as I said, S&P 500 had dropped 24% since the beginning of the year) and if true, I recommended that you realize those losses. Since you cannot buy them again, I recommended VTSAX.
But if all your lots already have gains only, and/or you want to keep them, I have no arguments against it. Just make sure you do not buy any S&P 500 index type investment in any of your other accounts (Roth IRA for sure, and *perhaps* 401-k), as that would cause any losses in your taxable account to be lost forever.
Re: New Portfolio Help
SPY and VFIAX are the same thing and both low fee. Don't sell those if you have any tax at all, as those are both core holdings.Low six-figures
15% WCM Focused International Growth Mutual Fund Class Institutional (WCMIX) (1.06)
13% SPDR S&P 500 ETF Trust (SPY) (.09)
10% Ishares Russell Mid Cap (IWR) (.18)
10% JP Morgan Large Cap Growth Mutual Fund Class R6 (JLGMX) (.44)
8% MainStay MacKay High Yield Corporate Bond Fund Class R6 (MHYSX) (.56)
8% Technology Select Sector SPDR Fund (XLK) (.10)
7% iShares MSCI Emerging Markets ETF (EEM) (.68)
7% Vanguard 500 Index Fund Admiral Shares(VFIAX) (.04)
7% Consumer Discretionary Select Sector SPDR Fund (XLY) (.01)
4% Invesco Real Estate Fund Class R6 (IARFX) (.78)
4% T Rowe Price New Income Mutual Fund Class I (PRXEX) (.35)
3% PIMCO Investment Grade Credit Bond Fund Institutional Class (PIGIX) (.35)
3% JP Morgan Small Cap Growth Mutual Fund Class R6 (JGSMX) (.74).
IWR and XLK and KLY are low cost index funds that are decent. I probably wouldn't have bought them, but they are fine and the fees aren't that bad. Not worth paying any significant taxes to get rid of them.
The rest you gotta get rid of. Those are some crazy fees. Not even joking with your balance and 30 years of growth, these fees could cost you $100k+ over time.
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- Posts: 8
- Joined: Sat Jan 11, 2020 11:46 am
Re: New Portfolio Help
I think i was able to edit the original post with the percent of the total portfolio in each account.ruralavalon wrote: ↑Fri Oct 07, 2022 10:08 amBoth SPY and VFIAX are S&P 500 index funds. That type of index fund has had almost identical performance to Vanguard Total Stock Market Index Fund over the 30 years since the creation of the first share class of the total stock market index fund.BsInvestor wrote: ↑Fri Oct 07, 2022 12:31 amAren't SPY and VFIAX very comparable to VTSAX? Not including those 2 I actually have almost equal gains and losses at this time, in which case you would recommend selling everything (keeping gains and losses as equal as possible) and moving them towards VTSAX?
Portfolio Visualizer, 1993-2022. I used the oldest share classes to get the longest period for comparison. Some years one fund type was a little ahead, some years the other did a little better.
In general I prefer a total stock market index fund over a S&P 500 index fund because a little more diversified. So I would use the proceeds of sales of funds in the taxable account to buy some Vanguard Total Stock Market Index Fund (VTSAX).BsInvestor wrote: ↑Fri Oct 07, 2022 12:48 amIt seems like both you and u/lakpr are recommending to sell essentially everything in my taxable account, while keeping gains/losses equal, and moving it towards either VFIAX or VTSAX, which I do like the idea of. Under your recommendation on which funds to sell, I would have more losses than gains though. What is the recommendation on selling in that situation then? Save some losses for next year?
Yes, I am in between jobs this year and my income has decreased significantly, so you would recommend making these changes now correct?
But I would not sell SPY or VFIAX to buy VTSAX if that created any significant income tax liability.
If you want an international stock allocation, then consider also buying some Vanguard Total International Stock Index Fund (VTIAX) in your taxable brokerage account. Both VTSAX and VTIAX are very tax-efficient, and diversified with very low expense ratios.
You need to plan out what you wish to hold in each account before executing any change in your taxable brokerage account. It's usually best to treat all accounts together as a single unified portfolio, rather than treat each account separately.
What proportion (either percentages or dollar amounts) of the total portfolio is in each account?
About how much do you believe you may be able to contribute annually to investing (total, all accounts)?
Do you know what funds will be available in your new employer's plan? Please give fund names, tickers and expense ratios.
Do you wish to have an allocation to international stocks?
You can simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.
. . . . . .
I am not a tax expert, I don't even prepare my own tax returns.
If you realize more capital losses than gains then you can carry forward the losses to offset some income in future years. Investopedia, "Capital Losses and Tax", link. Wiki article Tax loss harvesting.
Before taking any action, please read the entire linked Investopedia article, the entire wiki article, and "download the Schedule D instructions from the IRS website at www.irs.gov". It's probably a good idea to consult a CPA or tax attorney about this.
I am not a tax expert, I don't even prepare my own tax returns.
I'm hoping to be able to max out my 401k and IRA next year, but I am unsure what will be in my new employer's plan and how much i'll be able to allocate/invest into my taxable account. As for international stocks, I think I'd like to keep it fairly minimal, <10%.
Thank you for the suggested reading, looks like I got some homework to do this weekend!
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Re: New Portfolio Help
Awesome! thank you for the clarification.lakpr wrote: ↑Fri Oct 07, 2022 10:02 pmPoster @ruralavalon already answered this question above, but let me explain my reasoning in a bit more detail in this reply. Yes, they are very comparable to VTSAX, and the returns have been pretty consistent over the last 30 years. If it means realizing unrealized capital gains that aren't offset by losses (and thus incurring a tax liability), I would not suggest selling them either.BsInvestor wrote: ↑Fri Oct 07, 2022 12:31 am For step 3: Aren't SPY and VFIAX very comparable to VTSAX? Not including those 2 I actually have almost equal gains and losses at this time, in which case you would recommend selling everything (keeping gains and losses as equal as possible) and moving them towards VTSAX?
The reason for my preference for VTSAX in taxable is that it is more diversified than just the 500 index (500 companies vs. 3500 companies), and I noticed that you did not have it anywhere in your portfolio yet. For tax-loss-harvest reasons, when you sell something for a loss, you should not have any replacement shares that were bought within the last 30 days and the next 30 days (so a total period of 61 days including the day of sale). I assumed these lots will have losses (as I said, S&P 500 had dropped 24% since the beginning of the year) and if true, I recommended that you realize those losses. Since you cannot buy them again, I recommended VTSAX.
But if all your lots already have gains only, and/or you want to keep them, I have no arguments against it. Just make sure you do not buy any S&P 500 index type investment in any of your other accounts (Roth IRA for sure, and *perhaps* 401-k), as that would cause any losses in your taxable account to be lost forever.
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Re: New Portfolio Help
Kinda what I was thinking too, thanks!the_wiki wrote: ↑Fri Oct 07, 2022 11:01 pmSPY and VFIAX are the same thing and both low fee. Don't sell those if you have any tax at all, as those are both core holdings.Low six-figures
15% WCM Focused International Growth Mutual Fund Class Institutional (WCMIX) (1.06)
13% SPDR S&P 500 ETF Trust (SPY) (.09)
10% Ishares Russell Mid Cap (IWR) (.18)
10% JP Morgan Large Cap Growth Mutual Fund Class R6 (JLGMX) (.44)
8% MainStay MacKay High Yield Corporate Bond Fund Class R6 (MHYSX) (.56)
8% Technology Select Sector SPDR Fund (XLK) (.10)
7% iShares MSCI Emerging Markets ETF (EEM) (.68)
7% Vanguard 500 Index Fund Admiral Shares(VFIAX) (.04)
7% Consumer Discretionary Select Sector SPDR Fund (XLY) (.01)
4% Invesco Real Estate Fund Class R6 (IARFX) (.78)
4% T Rowe Price New Income Mutual Fund Class I (PRXEX) (.35)
3% PIMCO Investment Grade Credit Bond Fund Institutional Class (PIGIX) (.35)
3% JP Morgan Small Cap Growth Mutual Fund Class R6 (JGSMX) (.74).
IWR and XLK and KLY are low cost index funds that are decent. I probably wouldn't have bought them, but they are fine and the fees aren't that bad. Not worth paying any significant taxes to get rid of them.
The rest you gotta get rid of. Those are some crazy fees. Not even joking with your balance and 30 years of growth, these fees could cost you $100k+ over time.
- ruralavalon
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- Location: Illinois
Re: New Portfolio Help
About when do you think you might know the funds available in your new employer's plan?BsInvestor wrote: ↑Fri Oct 07, 2022 11:20 pmI think i was able to edit the original post with the percent of the total portfolio in each account.
I'm hoping to be able to max out my 401k and IRA next year, but I am unsure what will be in my new employer's plan and how much i'll be able to allocate/invest into my taxable account. As for international stocks, I think I'd like to keep it fairly minimal, <10%.
Thank you for the suggested reading, looks like I got some homework to do this weekend!
What funds are offered in your former employer's plan? Please give fund names, tickers an expense ratios.
Whether it's best to rollover your 401k account in the former employer's plan into your new employer's plan will depend primarily on comparison of the funds offered and expenses.
I agree with the suggestion to put your "10-20% bonds" allocation in your 401k account (currently 33% of total portfolio), it depends on what bond funds are offered.
The placement of your "<10%" international stock allocation will depend somewhat on the funds offered in the employer plans.
In general your Roth IRA (currently 11% of total portfolio) should be used for stock funds, not bond funds.
In general your taxable brokerage account (currently 55% of total portfolio) should hold very tax-efficient stock index funds.
Wiki article Tax-efficient fund placement.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
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Re: New Portfolio Help
These are the other funds offered through my former employer's plan with the bond and international funds at the top:ruralavalon wrote: ↑Sat Oct 08, 2022 9:55 amAbout when do you think you might know the funds available in your new employer's plan?BsInvestor wrote: ↑Fri Oct 07, 2022 11:20 pmI think i was able to edit the original post with the percent of the total portfolio in each account.
I'm hoping to be able to max out my 401k and IRA next year, but I am unsure what will be in my new employer's plan and how much i'll be able to allocate/invest into my taxable account. As for international stocks, I think I'd like to keep it fairly minimal, <10%.
Thank you for the suggested reading, looks like I got some homework to do this weekend!
What funds are offered in your former employer's plan? Please give fund names, tickers an expense ratios.
Whether it's best to rollover your 401k account in the former employer's plan into your new employer's plan will depend primarily on comparison of the funds offered and expenses.
I agree with the suggestion to put your "10-20% bonds" allocation in your 401k account (currently 33% of total portfolio), it depends on what bond funds are offered.
The placement of your "<10%" international stock allocation will depend somewhat on the funds offered in the employer plans.
In general your Roth IRA (currently 11% of total portfolio) should be used for stock funds, not bond funds.
In general your taxable brokerage account (currently 55% of total portfolio) should hold very tax-efficient stock index funds.
Wiki article Tax-efficient fund placement.
Fidelity US Bond Index Fund (FXNAX) (0.03%)
Core Plus Bond Separate Account-Z (couldn't find the ticker) (0.26%)
Fidelity Total International Index Fund (FTIHX) (0.06%)
MFS International Diversification R6 Fund (MDIZX) (0.72%)
Vanguard Target Retirement Funds 2025-2070 (0.08%)
Dodge & Cox Stock X Fund (DOXGX) (0.41%)
T. Rowe Price Large Cap Growth I Fund (TRLGX) (0.55%)
Allspring Special Mid Cap Value R6 Fund (WFPRX) (0.70%)
Fidelity Mid Cap Index Fund (FSMDX) (0.03%)
Fidelity Small Cap Index Fund (FSSNX) (0.03%)
Fidelity Small Cap Value Index Fund (FISVX) (0.05%)
MFS Mid-Cap Growth R6 Fund (OTCKX) (0.65%
Thank you for the link to the wiki article!
- ruralavalon
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- Location: Illinois
Re: New Portfolio Help
Your former employer's plan offers many good fund choices, you are fortunate.
Your former employer's plan offers excellent, very diversified, very low cost index funds, specifically:
1) Fidelity 500 Index Fund (covers 80% of U.S.stock market, investing in stocks of selected large-cap and mid-cap U.S. companies) (FXAIX) (.02);
2) Fidelity Total International Index Fund (FTIHX) (0.06%); and
3) Fidelity US Bond Index Fund (a total bond market index fund, uses the Bloomberg US Aggregate Bond Index) (FXNAX) (0.03%).
You said "Desired Asset allocation: 80-90% stocks/ 10-20% bonds". You could place your entire bond allocation in that account (currently 33% of total portfolio) using Fidelity US Bond Index Fund (FXNAX) (0.03%), with the rest of that account in one or both of the stock index funds.
It will be interesting to see if your new employer's plan offers equal or better fund choices.
Your former employer's plan offers excellent, very diversified, very low cost index funds, specifically:
1) Fidelity 500 Index Fund (covers 80% of U.S.stock market, investing in stocks of selected large-cap and mid-cap U.S. companies) (FXAIX) (.02);
2) Fidelity Total International Index Fund (FTIHX) (0.06%); and
3) Fidelity US Bond Index Fund (a total bond market index fund, uses the Bloomberg US Aggregate Bond Index) (FXNAX) (0.03%).
You said "Desired Asset allocation: 80-90% stocks/ 10-20% bonds". You could place your entire bond allocation in that account (currently 33% of total portfolio) using Fidelity US Bond Index Fund (FXNAX) (0.03%), with the rest of that account in one or both of the stock index funds.
It will be interesting to see if your new employer's plan offers equal or better fund choices.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
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Re: New Portfolio Help
Thank you so much for taking the time to go over some recommendations and help me out with sorting out some of my portfolio!ruralavalon wrote: ↑Tue Oct 11, 2022 11:08 am Your former employer's plan offers many good fund choices, you are fortunate.
Your former employer's plan offers excellent, very diversified, very low cost index funds, specifically:
1) Fidelity 500 Index Fund (covers 80% of U.S.stock market, investing in stocks of selected large-cap and mid-cap U.S. companies) (FXAIX) (.02);
2) Fidelity Total International Index Fund (FTIHX) (0.06%); and
3) Fidelity US Bond Index Fund (a total bond market index fund, uses the Bloomberg US Aggregate Bond Index) (FXNAX) (0.03%).
You said "Desired Asset allocation: 80-90% stocks/ 10-20% bonds". You could place your entire bond allocation in that account (currently 33% of total portfolio) using Fidelity US Bond Index Fund (FXNAX) (0.03%), with the rest of that account in one or both of the stock index funds.
It will be interesting to see if your new employer's plan offers equal or better fund choices.