Personal Investments • Portfolio Overhaul Help Needed Due to Changing Circumstance

One other option I've considered, although it won't help with current gains, is to move the bulk of the money in the taxable account into the roth. I didn't make a contribution last year or this year, so I could move most of it over & it could then grow without causing another tax problem going forward. But again I can't decide if that's the best move.

Was there any earned income last year or this year that would allow you to contribute to your Roth IRA? In that case, it would be a good idea to use the cash in your taxable to make a contribution to your Roth account.

If you mean income other than from pensions & social security then that would be a no.

Is there just one Roth account or do each of you have one? No other Traditional IRA accounts or any other tax-advantaged retirement accounts, just the Roth and taxable?

We only have the one Roth IRA & the taxable account.

Have you already sold everything in your Roth? What did you put them in?

Not yet. I'm doing a few each night.

No point in dragging it on, just get them all sold at once and if you prefer ETFs put everything in your Roth in VTI (Vanguard Total Stock Market Index Fund). If you'd rather use mutual funds then invest it all in SWTSX (Schwab Total Stock Market Index Fund) so there are no trading fees.

I only sell using limit orders so I still have stock sells waiting to be triggered. I think that investing the proceeds in a Total Stock Market ETF is a good idea going forward. I don't have that much in the Roth IRA.

Have you already harvested your losses in the individual stocks?

I have already sold off all the stocks with losses in my taxable account. Now I'm starting to sell off stocks with equal gains. I did have $21,000 sitting in my taxable acct thanks to 3 stocks being bought out & I put part of that in a Schwab target date fund plus the Vanguard S&P 500 Index & Total Stock market index. I plan to funnel more money into those as I sell off stocks.

Good job on selling all the stocks with losses, but you really don't need to buy both the Total Stock and the S&P500 Index. Total Stock already contains the S&P 500. And if you want to go with a target date fund stick just with that don't keep adding TS to it. A target date fund already contains TS beside international stock and bonds + international bonds.

You really should figure out first what your desired AA is.
I could tell you what I would do but you are the only one who can decide what you would be comfortable with. Normally I would go for a 60/40 AA but if I was in your situation, I would count the pensions as my bonds which would allow me to invest both the Roth and the taxable account 100% in stocks, with them being invested for the long run.
Could you stomach that? Would you be able to not panic and sell if they would drop 50%? Only you could decide that.

I was already 100% in stocks, so with the added diversification of the TS index, I feel good about 100% stocks. I survived the financial crash of 2008 without selling. In fact I bought more & made back everything I lost & more. Although with the Target Date Fund I do have a small exposure to bonds. I only have $10,000 invested because I couldn't figure out the best allocation & felt that the money just sitting there should be doing something, so that seemed like a good idea at the time just to get me moving.

Your monthly expenses are covered by your income and you don't need to withdraw from your Roth and taxable accounts, instead you could actually add some more with the extra income each month. Or consider paying off some of your higher interest debt.

We've decided to apply for my spousal benefit social security (I'm 4 credits short to collect on my own) and have that check deposited directly into the brokerage account which should help tremendously. We don't have any high interest debt, thank goodnesss.

Another decision to make is if you want to invest a portion of your stock allocation into international stock market. I know lots of people decide not to and some people go as far as splitting half half between the US and international allocation. Again, this is a personal choice and you need to figure it out for yourself.
Target funds include the international market along with the US.

I'm not a fan of international stock, but I do have a small exposure through the TD fund & I'm okay with that for the time being. Do you think that consolidating everything into a TS fund is sufficient? It's hard to wrap my head around a single fund being all I need.

If you decide not to go 100% stock and would rather have some bond allocation for stability, then I recommend you choose a Target date fundfund that has the percentage of bonds you want and use that in both your Roth and in your taxable. That's all you need, you're done.

I'm fine with 100% stock. I have no idea about bonds. I've never owned a bond or bond fund & I have no idea what a good allocation would be. That's why I chose the TD fund figuring it couldn't hurt to have a small amount of bonds & international stock. The good thing is that the international stock will go down, but then at the same time bond exposure will go up. But again the amount I have invested is not great, so I figure the impact on my overall holdings will be minimal. I'm still trying to figure all of this out. You've given me a lot to think about.

If you go 100% stock, decide if you want international or not but the Roth account is small enough that you should only have one fund in it and for now that can be either VTI or SWTSX like I was saying earlier.

I agree. The Roth is not big enough to hold more than one fund & a TS fund would be ideal.

Meanwhile, in the taxable, you can get more of the same or VXUS for the international if you decide you want the exposure. Set the dividends from the individual stock to get invested in SWTSX (or VTI) or VXUS and as you sell the individual stock reinvest the proceeds into one of these two funds.

GL

I think you just answered my earlier question about whether or not a TS fund alone would be sufficient. Again, you've given me a lot to think about. I appreciate your taking the time to go through this with me.

Statistics: Posted by Royalty — Tue Apr 16, 2024 1:59 am — Replies 40 — Views 4888

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