Best Method For Converting 50+ Stocks In To A 2 or 3 Fund Portfolio

[single2019]

Quote:

Originally Posted by RetMD21 T+2 settlement https://www.investor.gov/introductio...ins/updated-10 but SEC doesn't care if you don't have to wait

You are allowed to purchase prior to settlement; just can’t sell the unsettled security. Else you run into free riding violation.

https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/updated-9

[MichaelB]

It’s clear there is a 2 day required settlement period. Fidelity explains this here https://www.fidelity.com/trading/faqs-placing-orders

Quote:

The settlement date is the day on which payment for securities bought or certificates for securities sold must be in your account. Settlement dates vary from investment to investment; please see the table below for details. When you buy a security, payment must reach Fidelity by the settlement date. When you sell a security, Fidelity will credit your account for the sale on the settlement date. For options and other securities settling in one day, you must have sufficient cash or margin equity in your account when your order is placed.

When buying and using funds from an unsettled trade, the obvious risk is of the unsettled trade never settling. The risk of this happening is small, but it does exist. There are ways to get around it, such as using margin or splitting the trades over a period of days, but they add additional cost or delay.

There are examples here in the forum of brokers cancelling trades in fixed income.

[38Chevy454]

Quote:

Originally Posted by MichaelB It’s clear there is a 2 day required settlement period. Fidelity explains this here https://www.fidelity.com/trading/faqs-placing-orders When buying and using funds from an unsettled trade, the obvious risk is of the unsettled trade never settling. The risk of this happening is small, but it does exist. There are ways to get around it, such as using margin or splitting the trades over a period of days, but they add additional cost or delay. There are examples here in the forum of brokers cancelling trades in fixed income.

Thanks for the link and information. I was going to try and find where my memory was getting the information from. I just know that I have received a msg that funds were not available for a couple days. In spite of people calling me being wrong

[RetiredAt49]

Quote:

Originally Posted by 38Chevy454 Thanks for the link and information. I was going to try and find where my memory was getting the information from. I just know that I have received a msg that funds were not available for a couple days. In spite of people calling me being wrong [emoji35]

You can sell and then immediately turn around and purchase stocks as long as you hold those new stocks for 2 days. I confirmed that with fidelity yesterday

[single2019]

Quote:

Originally Posted by MichaelB It’s clear there is a 2 day required settlement period. Fidelity explains this here https://www.fidelity.com/trading/faqs-placing-orders When buying and using funds from an unsettled trade, the obvious risk is of the unsettled trade never settling. The risk of this happening is small, but it does exist. There are ways to get around it, such as using margin or splitting the trades over a period of days, but they add additional cost or delay. There are examples here in the forum of brokers cancelling trades in fixed income.

Nobody is talking about fixed income trades. Selling stocks and immediately buying another stock is permitted by SEC and by Fidelity

[single2019]

Quote:

Originally Posted by 38Chevy454 Thanks for the link and information. I was going to try and find where my memory was getting the information from. I just know that I have received a msg that funds were not available for a couple days. In spite of people calling me being wrong

It’s okay to be wrong once in a while

[MichaelB]

Everyone has made their point, let’s not get personal.

[RetMD21]

Quote:

Originally Posted by 38Chevy454 Thanks for the link and information. I was going to try and find where my memory was getting the information from. I just know that I have received a msg that funds were not available for a couple days. In spite of people calling me being wrong

My take is that they have to give you access to your money in T+2 but some brokers may offer some customers a better deal. I'm not sure it's universal.

[single2019]

This discussion is critical when folks are doing TLH. While 2 days out of the market may not make a difference, it goes against my philosophy of staying invested. Fidelity and Vanguard allow you to buy immediately after selling a security. Feel free to comment with data

[RetiredAt49]

Quote:

Originally Posted by single2019 This discussion is critical when folks are doing TLH. While 2 days out of the market may not make a difference, it goes against my philosophy of staying invested. Fidelity and Vanguard allow you to buy immediately after selling a security. Feel free to comment with data

Agreed. As the OP of this thread, I sold a bunch of stocks/ETF's yesterday and immediately purchased VOO and I'm sure glad I did because VOO jumped 2.62% today.

[voidstar]

You can sell it on Fidelity, and have funds right away to buy - sort of. As mentioned, you can buy stuff immediately, but you can't then sell what you buy until the original selling is settled (typically after 2-3 days). Otherwise, you get a Good Faith violation. So as long you don't accidentally buy the wrong ticker, it's all good.


I guess I'm in a similar situation - just smaller scale: 20 picks and half the loss. Can't you only take $3k a year in "gambling" losses? (or are investment losses a different category?) And only if you itemize? I have everything paid off and haven't itemized in a while.


Isn't there an old adage, something about "7 +/- 2" things is the limit of what our brains can keep track of (one reason old phone numbers were 7 digit, ignoring the area code)?

BUT one of my picks could be "the one", right? ;-D


I asked TDAmeritrade about this once - a way to "reset" your portfolio. i.e., do a Sell All, then re-buy everything you just sold. Obviously that screws up or complicated tax stuff. But the reason for doing this is so that all your performance metrics are now relative a new starting point. But the real reason is: seeing full red for months and months is depressing, but doing a reset at a low point would then start showing some green sooner, giving an artificial good-feel


That's what bugs me with this zero-commission fee stuff. What prevents anyone from just screwing with the market and just doing something like that every day? Seems like even just a $1 commission fee would encourage at least a pause to give it some thought (and also help track where that $1 was coming from - so if there are any issues, audits have a place to start looking)

[RetiredAt49]

Okay I've reduced my 50+ stock/etf portfolio (that my AUM wealth management company had me in) down a fair bit but I have a ways to go. What is bugging me the most are various ETF's, most of them that have high expense ratios (e.g. .2 or higher)... However, according to portfoliovisualizer they have performed quite well. The ETF's I'm still in are:

• IHI

• IGV

• SMH

• QQQ

• XLI

• XLY

• VUG

• IEUR

I'm still in quite a few individual stocks as well. Just trying not to rush into bulk selling everything because my WMC did have me well diversified and since this is a taxable account I need to tread carefully as I'd like to keep most of the capital losses we got last month to offset future capital gains in this account as well as some rental properties we own.

[Canoeboy]

Congrats on firing your financial advisor and making the decision to simplify your holdings with index funds. I recently did the same, moving all accounts over to VG which is where my 401k happened to be. Prior holdings in non-401k accounts were active managed mutual funds with annual fees from 0.5 to 1.5%. Just finishing up transition to index funds (ballpark 0.05% fees). All in all, about 12k in annual savings. Feels good!

[imnontrad]

First of all, good for you for firing them. This portfolio is a nightmare of complexity.

But do not sell all because you already have some decent ETFs in that mix. And some of the individual equities are solid too (my portfolio is a mix of index MF/ETFs and equities that perform better than the indexes).

If you sell all now, then you will still have a carryover loss of ~$187,000. This would mean that you would either have a reportable loss of $3,000 for the rest of your life or balance any capital gains probably for at least a decade.

But before you sell, already have a plan how that money will be invested.

[RetiredAt49]

Quote:

Originally Posted by imnontrad First of all, good for you for firing them. This portfolio is a nightmare of complexity. But do not sell all because you already have some decent ETFs in that mix. And some of the individual equities are solid too (my portfolio is a mix of index MF/ETFs and equities that perform better than the indexes). If you sell all now, then you will still have a carryover loss of ~$187,000. This would mean that you would either have a reportable loss of $3,000 for the rest of your life or balance any capital gains probably for at least a decade. But before you sell, already have a plan how that money will be invested.

Appreciate your (and others) advice. I sold all individual stocks that were "losers" + increase my capital loss (which I view as a great thing when I need to sell equities or real estate in the years to come). I did sell some "losers" at a minor capital gain but I'm still sitting at around $300k in capital losses which I will leverage in the years/decades to come when we sell equities or real estate.

I agree that my FA had me in a some decent individual stocks and ETF's. Some of the ETF's have a .35 or .4 expense ratio but they have done well for the past decade or two according to portfolio visualizer. Either way, I'm not paying my AUM financial advisor 1.25% any more so

I haven't yet touched my traditional IRA because it too has 50-60 individual stocks and/or ETF's but I can do whatever in that account and not trigger taxable events so I really wanted to focus initially on my taxable account.

I also decided that I would dedicate a tiny portion (less than 1/2 of 1%) of our taxable brokerage account using leveraged ETFs - just for the fun of it.

As a side question, do ETF's generate capital gains even if I don't sell them? I know some generate dividends but when they swap individual equities within the ETF, do I get hit with capital gains?

[gauss]

Quote:

Originally Posted by single2019 That has been my experience too. So for the folks who said it takes 2 to 3 days, where did that come from

You would need to wait the 2 to 3 days to withdraw the cash from the account.

-gauss

[imnontrad]

Quote:

Originally Posted by RetiredAt49 As a side question, do ETF's generate capital gains even if I don't sell them? I know some generate dividends but when they swap individual equities within the ETF, do I get hit with capital gains?

No ETFs (generally) do not spin off the capital gains, or losses. This is why I have these in my taxable portfolio and not their mutual fund equivalent.