Baptism by fire on my way to a lazy portfolio
I recently left my FA (yay!) and moved all investments to Vanguard (in-kind transfer). My intention is to simplify my portfolio to a few diversified low-cost index funds as is recommended by many in this forum and elsewhere. For my taxable account, the tax consequences of an immediate jump to this new mix would be ugly.
As a new flagship customer, I met with a Vanguard advisor, who produced a plan to start the process with minimal tax consequences. First up to move were mainly bonds and international stocks. I completed the first round of sales late last week just before coronavirus fears took hold of the market. (Lucky overall, I guess. Wish my selloff hadn’t been bond-heavy.) I've been holding off this week to see how things shake out.
Including cash I've pulled in, my taxable account is now 40+% cash. Otherwise, I'm in 7 funds that represent the US stock market.
I have two questions:
In this situation, would you get back in on bonds right away, or sit on cash for a bit?
Secondly, this weeks drops have erased a decent chunk of the gains on a couple of those 7 funds that remain, bringing them into a range where the tax hit wouldn’t be horrible. Should I sell these and begin a piecemeal move toward VTSAX sooner, realizing that VTSAX won’t fully plug the holes? For example, if I sell a large position in small/midcaps, they'll be underrepreseented in my portfolio overall until I've fully transitioned. That said, not sure there will be a better time.