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

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RetiredAt49

Recycles dryer sheets
Joined
Oct 30, 2021
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I just recently fired my AUM Wealth Management Company. My taxable brokerage account contains approx. 50+ individual stocks plus a few ETF's. My goal is to shift everything to a two or three, low-cost, index fund portfolio.

Just prior to me firing them, they had recently performed some tax loss harvesting (due to the market drop) and I currently have about a $300,000 capital loss inside this brokerage account.

If I were to bulk replace all existing equities (individual stocks and ETF's), I would incur a capital gain of about $110,000 but because I already have a loss of $300,000 then I'd still have a capital loss at years end.

Would you recommend that I do a bulk swap right now? Should I only sale those individual stocks/ETFs that currently have a loss and/or perform poorly? Here's a list of the stocks/equities:

TCEHY
LYFT
CAT
JNJ
MXI
EWT
DE
SNY
AVGO
IEUR
HMC
MDT
BAC
CCI
IYZ
KWEB
BOTZ
EWJ
GSK
ES
IXJ
UL
XLI
EWL
PPRUY
IGV
TTE
IHI
QQQ
VUG
KCE
WDAY
MA
FINX
SMH
TMO
XLY
RTX
BP
MRK
SHEL
PAYC
AZN
CVX
HLN
SLB
HAL
COST
LLY
COP
DVN
 
If you’ve decided to move all your equities from individual stocks to low cost etfs there’s no better time than right now, because you can offset all the gains.
 
Forgive my ignorance but I'm new to Fidelity, where my brokerage account is located. Can I place a trade that sells all of my stocks/etfs and then immediately purchase the 2 or 3 low cost index funds? Or do I need to sell each one individually?
 
RetiredAt49 said:
Forgive my ignorance but I'm new to Fidelity, where my brokerage account is located. Can I place a trade that sells all of my stocks/etfs and then immediately purchase the 2 or 3 low cost index funds? Or do I need to sell each one individually?
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You will have to sell all the stock and ETF positions individually to have records of final sales prices. You can buy new (whatever you choose) ETFs anytime you have cash available to trade.
 
RetiredAt49 said:
Forgive my ignorance but I'm new to Fidelity, where my brokerage account is located. Can I place a trade that sells all of my stocks/etfs and then immediately purchase the 2 or 3 low cost index funds? Or do I need to sell each one individually?
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It would be convenient to have a sell it all button :) I like some of your stocks and ETFs more than others but it you are going for simplicity sell it all . You may have to wait for the trades to settle before you place your buy orders. If you trade when the market is open you can use market orders but if you want to enter trades for execution the next day it is probably safer to use limit orders.
 
RetMD21 said:
It would be convenient to have a sell it all button :) I like some of your stocks and ETFs more than others but it you are going for simplicity sell it all . You may have to wait for the trades to settle before you place your buy orders. If you trade when the market is open you can use market orders but if you want to enter trades for execution the next day it is probably safer to use limit orders.
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I was just chatting with Fidelity and they said their ActiveTraderPro app allows you to sell it all at the same time (I'm playing around with it now)... looks like you still have to type in each stock/etf manually and build a queue of trades.

I just don't want to screw it up because I have $1.5 million sitting in there :)
 
RetiredAt49 said:
I was just chatting with Fidelity and they said their ActiveTraderPro app allows you to sell it all at the same time (I'm playing around with it now)... looks like you still have to type in each stock/etf manually and build a queue of trades.

I just don't want to screw it up because I have $1.5 million sitting in there :)
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I'm not a Fidelity account holder and know nothing about the ActiveTradePro system. I suppose it sells the stocks on market prices vs. bid/ask spreads?

Something to ask about as market orders may not be the best way to get good sales prices.
 
I agree sell it all now to offset the gains with the losses. You will still have lot of carryover losses for future years. This year's taxes will be a bunch of documentation, but future years will be easy.

It's not too hard to just sell each one. Especially if you do market order sale, it will transact almost instantly. It will take approx 2-3 days for the money to be available for reinvesting. Then you can buy the funds you want for the simplified self directed portfolio.
 
If you have a margin account, you should be able to sell and buy on the same day.
 
You could also look to see if the gains are concentrated in a few positions you'd like to keep.

For example, I noticed that QQQ is in the list. That is the NASDAQ 100 Index. You may just want to keep that if a tech-centric index will be part of your mix.

But otherwise, hit the ejection handle and rationalize the portfolio into something you can manage easily.
 
Were dividends being reinvested?

If so, that could create some wash sales, and complicate the accounting. Though technically, it shouldn't matter if you sell all of that stock, the IRS may still want to see the accounting. Even then, you might get away with a consolidated statement, but I read here that someone had the IRS come back and ask for the individual trades (what, the IRS needs more work?).

But if you look at a stock, and the reinvestment was more than 30 days ago - no problem. So it shouldn't be hard to avoid this, it just might take 30 more days for a few of them.

-ERD50
 
38Chevy454 said:
I agree sell it all now to offset the gains with the losses. You will still have lot of carryover losses for future years. This year's taxes will be a bunch of documentation, but future years will be easy.

It's not too hard to just sell each one. Especially if you do market order sale, it will transact almost instantly. It will take approx 2-3 days for the money to be available for reinvesting. Then you can buy the funds you want for the simplified self directed portfolio.
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Are you sure of “2-3 days for the money to be available”? I am able to buy as soon as I have sold and I don’t have a margin account.
 
You should have fired them a long time ago. Nobody has the time to actively watch a portfolio with 50 different accounts.

With the stock market in the position like it is, I have no suggestions for you. A lot of studying of each account's past history would be required. It might be time for professional guidance on how to simplify your portfolio to where it's manageable.
 
Bamaman said:
You should have fired them a long time ago. Nobody has the time to actively watch a portfolio with 50 different accounts.
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Right! It took a lot of convincing my spouse that we didn’t need a FA to manage our investments.
 
single2019 said:
Are you sure of “2-3 days for the money to be available”? I am able to buy as soon as I have sold and I don’t have a margin account.
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As they say, it depends. For Fidelity funds, the money is available as soon as the sale is done at end of the trading day and money is there next morning. For individual stocks it can take a little longer. At least that is my experience. I don't bother with a margin account either. If you look at your Fidelity account, it will tell you when and how much money is available for reinvestment. Since I am mostly a buy and hold, waiting a day or two for reinvesting the funds from a sale is usually not an issue.
 
38Chevy454 said:
As they say, it depends. For Fidelity funds, the money is available as soon as the sale is done at end of the trading day and money is there next morning. For individual stocks it can take a little longer. At least that is my experience. I don't bother with a margin account either. If you look at your Fidelity account, it will tell you when and how much money is available for reinvestment. Since I am mostly a buy and hold, waiting a day or two for reinvesting the funds from a sale is usually not an issue.
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Well I sold quite a few stocks/ETFs today and was able to immediately purchase shares with those proceeds. Only caveat is they don’t let you sell the newly purchased equity for two days… but I have no plans to do it as I put all of it in VOO
 
RetiredAt49 said:
Well I sold quite a few stocks/ETFs today and was able to immediately purchase shares with those proceeds. Only caveat is they don’t let you sell the newly purchased equity for two days… but I have no plans to do it as I put all of it in VOO
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That has been my experience too. So for the folks who said it takes 2 to 3 days, where did that come from
 
It’s clear there is a 2 day required settlement period. Fidelity explains this here https://www.fidelity.com/trading/faqs-placing-orders
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.
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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.
 
MichaelB said:
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.
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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 :mad:
 
38Chevy454 said:
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]
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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
 
MichaelB said:
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.
Click to expand...

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