Pulling the trigger - This should be easy

[Lagniappe]

So I've read all the books (4 Pillars, Work less Live More, Retire Early Live Well, Coffehouse) and it all makes sense to me. Index Funds, stick to the plan, rebalance annually, and 3.5 years from now start withdrawing 4% per year to live one. I've even gone so far as to contact a DFA advisor that I'm comfortable with and open an account.

Now the hard part - selling mutual funds and stocks, some of which I've owned for ten years, and moving them to the new account. I've managed to procrastinate for over a month now, playing with spreadsheets on the capital gains taxes I'll end up paying, examining the purchase date of every stock and rationalizing why I should hold on to it a bit longer (yes, I've owned it for 6 months but it has no gains, there is no logic to waiting to sell it). Basically I'm proacrastinating for no rational reason - I know this is what I want to do, but I clearly haven't fully let go of the belief that somehow these earlier choices are going to pay off in some market beating way.

This should be so easy, but somehow it is not.

 

[yakers]

Well there was an earlier thread on the pain of selling "good" stocks:'http://early-retirement.org/forums/index.php?topic=10010.0

One way to go is to put all your new money into the funds you intend to develop. Then you at least have the funds open when you want to do transfers. Capital gains taxes are bad but generally less bad than most other taxes
If you have an AA and you have stocks that fit that you would buy today then why sell them? Yes, I like things simple, most of my funds are in a Lifecycle Fund. But you don't have to do to do that if you have a portfolio that is actually working for you. I like having some stocks so I can get dividends , harvest tax losses and sell for unplanned expenses. These are all of 7 or 8% of my assets so I just sort of ignore them with my major AA and simple index funds. I think unclemick does this just to keep his mind/ego busy, kind of like a financial sudoko.

 

[millerjwm]

I followed the same path including reading the same books. If you want yet another book to sell you on indexing and DFA try “Live It Up without Outliving Your Money 10 Steps to a Perfect Retirement Portfolio” by John Merriman published by John Wiley & Sons in 2005.

It took me 10 years from the time that I decided indexing was the right way to go to make the move. It was hard to admit that I have no special investing ability that would allow me to beat the market over the long term. I eventually went to a DFA advisor in my home town of Evanston, IL. He is also a CPA. I arranged for him to transfer all our retirement accounts to his custodian, liquidate their contents and reinvest them in DFA. This took the decision of what to sell out of my hands.

I kept personal control of all the non-retirement accounts. This satisfies my desire to trade stocks occasionally.

One of these years I may take back the retirement funds and use Vanguard and ETFs to implement an indexing/rebalancing strategy on my own.

 

[bosco]

I followed the same path including reading the same books. If you want yet another book to sell you on indexing and DFA try “Live It Up without Outliving Your Money 10 Steps to a Perfect Retirement Portfolio” by John Merriman published by John Wiley & Sons in 2005.

Paul Merriman, not John

 

[Patrick]

Paul Merriman, not John

Is that the same guy who was using moving averages to time the market years ago?

 

[bosco]

Is that the same guy who was using moving averages to time the market years ago?

yes, it is. I think he still does it. Although I've never been very impressed with his timing signals.

 

[Patrick]

yes, it is. I think he still does it. Although I've never been very impressed with his timing signals.

I tried it. Lost money.

 

[Lagniappe]

Okay, so I won't try his market timing signal, not sure how that is consistent with index funds anyway. But I will read the book - more information is always better. And I will definitely start with the new money going to the DFA funds - great suggestion with no associated selling angst. Thanks.

 

[LOL!]

You aren't paying us enough to help you through this change. This is what you are paying your DFA advisor for. What has s/he done to help you with the switch?

 

[Lagniappe]

The DFA advisor has spoken to me once about the approach, which I agreed to. As this is a very low fee DFA advisor (fixed fee regardless of acount size) I don't expect a lot of hand holding.

 

[wabmester]

The DFA advisor has spoken to me once about the approach, which I agreed to. As this is a very low fee DFA advisor (fixed fee regardless of acount size) I don't expect a lot of hand holding.

Are you going with Evanson Asset Management? If so, please share your experiences with him. If I were to go with DFA, that's probably the route I'd take.

 

[kumquat]

Colour me dumb, but. In this case what does DFA stand for? If it is a US MF company then OK, I don't know being Canadian. If it an acronym then WTFII (what is it)?

 

[millerjwm]

DFA stands for Dimensional fund advisors. Your assmumption that it is a company in the US that manages mutual funds is correct. I found a short article on the company at http://moneycentral.msn.com/content/P24208.asp

 

[Lagniappe]

Are you going with Evanson Asset Management? If so, please share your experiences with him. If I were to go with DFA, that's probably the route I'd take.

wab,

I am using Evanson, and so far my experience has been positive. I had a long conversation with Steve Evanson initially, and he and his staff have been quick to follow up as I've lobbed additional questions at them. The advisor I've been assigned to seems knowledgeable, experienced and no-nonsense. But it's clear there won't be a lot of hand holding - they are executing what we agreed to on my behalf.