*NO* Individual Stocks

[Dawg52]

I have a handful of blue chip dividend stocks to supplement my funds. Makes up just under 5% of entire portfolio. I do it to keep a little interest in the game.

 

[enjoyinglife102]

Like some others, I dabbled in individual stocks when I was younger. I've simplified most things in my life as I have aged including my investments so now hold five low expense funds. Allows me to spend my time on other things I find more enjoyable (and probably generate better returns with less worry!)

 

[Aerides]

One of the key things I've learned from participating in Internet forums is that gamblers always win.

1. Folks who like to visit the track and bet on the ponies always win.
2. Folks who like to go to Vegas always win.
3. Folks who wager on sports games or play parlay cards always win.
4. Folks who speculate on risky investments always win.

It's a great world for gamblers, isn't it?

Trust me, I'd be more than happy to report if I was losing or had a lot of losers in my bunch. and there is no always in anything in life.

I just got lucky more than I should have. Early buys on SQ, FB, NFLX, etc. Got a couple of losses in there - bought some Gilead but that flopped - lost $5 a share but only had 20 shares.

But I know enough to know the minute I get to ahead of myself and start thinking I can do bigger bets.

 

[Dash man]

I have individual stocks in my taxable brokerage account with large capital gain appreciations on all of them. My water and electric companies pay my bills too, and Starbucks pays for my coffee and scotch.
In my tIRA and Roth I have been transitioning to ETFs, and we’re about to put a bunch of maturing CDs into a individual bond ladder in a managed account. DW still has her 401k in mutual funds.
We have done very well with individual stocks, but I’m tired of watching them. So I’m moving toward a set it and forget it approach in the IRAs. Most of the individual stocks in my taxable account don’t require close watching, but we’ll reduce it over time. The dividends they provide are very nice. If they do change the capital gains tax or step up inheritance provisions, we’ll reevaluate.

 

[JohnnyBGoode]

Almost no individual stocks for me. Though I did buy some Amazon and Disney a few years ago and those have done quite well, they make up less than 2% of the portfolio. I think I did great with those picks but am under no illusion that I could replicate those choices again.

I think if picking individual stocks is fun for you and you stick within the S&P 500 you probably can't go too wrong if you are well diversified, but you really need the time and interest to pull it off - and then you'd probably be chasing S&P returns anyway.

 

[RetireBy90]

I had a smart friend advise me to set aside a “play” account and use that for market bets or individual stocks. I did this and it has served me well, not many big hits and a few bad bets but it keeps me from messing with the retirement funds. I often use a similar strategy with retail therapy, I buy something small I don’t really need but can use, small tool or the like to quench the desire to spend. Hey, it works for me. Just got another belt

 

[Lsbcal]

I keep my individual stocks here:

In my portfolio I keep asset classes . Individual stocks might be OK if you are able to hold really great ones through decades in a taxable account. But how do you identify such stocks? Beats me.

Personally I hold asset classes which I trade occasionally based on momentum but I do not recommend this as most people are not interested anyway or are not able to do the work.

 

[CSdot]

No individual in my serious accounts. I do have a play account which has individual stocks in it, but that is more so I have something to talk about at the club.

 

[Dtail]

Doing the necessary research to know what individual stocks to own, and when not to own them, is work. As a retired person I try to avoid as much of that as I can, so no individual stocks for me.

Big +1

 

[MRG]

No individual in my serious accounts. I do have a play account which has individual stocks in it, but that is more so I have something to talk about at the club.

I have a new play account as a 5 year delayed goodbye gift from Megacorp. My Roth is in mostly Google I purchased 9 years ago and sat on. In my main investment account I kept 1000 shares of Megacorp, a couple years ago it turned into 80k that's now in a fund. Nine years ago I bought 100 shares of Apple and sat on it, sold a bunch to put in funds and reinvested the dividends. I've been writing 10% OTM covered calls on it, seems like you can make an easy 1k monthly on that strategy.

 

[Sunset]

Most of our money is in ETF's or Funds, I prefer ETF's to not get surprised by fund declarations which seem to deem large taxable capital gains or dividends that don't show up as cash..

We do have some individual stocks as well, driven mostly by the desire to play with our food.

Also have some BRK.B, not sure to call that an individual stock , or an extremely tax-friendly conservative fund.

 

[Dtail]

It is not at all uncommon for early retirees to have a WR that exceeds 4% early in retirement... I did.... reinforcements of a small pension came along and SS is a short time way. We were at 5.8% our first few years of retirement... it dropped to 3.5-4.5% once my pension came on line and was only 1.8% last year because we paid off our car loan and mortgage at the end of 2019 and spent a lot less due to covid constraints on traveling and fun. 2021 looks like ~2% too and it will decline even more once DW starts collecting SS and to probably 1% or so once my SS is online. It is really that "ultimate" WR that is most important and you can estimate that with a little modeling.

I dabbled in individual stocks as a young adult but have been an avowed indexer since ~1982.... I do currently have a portfolio of 36 individual preferred stocks that is about 20-25% of our portfolio but no individual common stocks. I see nothing wrong with individual stocks as long as you are well diversified.

Agree. We will be close to 5% WR for the next 3 years, but our "ultimate" WR is around 2.9%.

 

[SnowballCamper]

I've learned that I don't have the aptitude to pick stocks. I'd have to decide to buy at the right time, and then decide to sell at the right time. Furthermore, I don't have the skills to pick the fund manager that would get those two things correct. So, yes, I believe the efficient market hypothesis. As a result, my Roth IRA is a target date fund, and my TSP is 25% Govt Security, and 75% index stock funds. When I think I need to do something (which is more often that it should be) I rebalance my TSP. I'm completely satisfied with this arrangement, over the previous one where I had some "play" money in individual stocks.

 

[thefist]

I'm mostly individual stocks. One benefit here is that the Expense Ratio is zero now that brokerages are commission free. Years ago I started paying for advice/analysis from Morningstar and Motley Fool. While I have to pick and pay, I rely on their analysis. It has paid for itself nicely. Following this stuff is part of the brain exercise I need, so that's all good. And it's fun to learn about new companies. That said, I could see myself converting much of it to ETF's in my Roth someday and getting time back. Having individual stocks in taxable is pretty powerful as far as selecting what to sell for tax management. But those multi-year, multi-baggers will cost you eventually.

As for your WR, remember that the 4% was worst case as happened in past history. If we're better going forward, you're fine. If worse, then adjustment is required. As pb4uski mentions, pay off a mortgage, start SS/pension, and that can reduce it.

 

[NW-Bound]

I own a lot of individual stocks, but there is absolutely nothing wrong with just owning mutual funds or ETFS....

+1


I currently hold a stock AA of 73%, of that about 85% are in individual stocks and sector ETFs, and only 15% are in MFs.

I try to stay quite diversified, and hold about 90 positions in different sectors. It's like running my own MF.

I want to see what is going on inside the market, and like to watch the sector rotation when other investors run to and fro different sectors. And I like to play contrarian, and run in the reverse direction when I feel like it.

 

[garyt]

One of the key things I've learned from participating in Internet forums is that gamblers always win.

1. Folks who like to visit the track and bet on the ponies always win.
2. Folks who like to go to Vegas always win.
3. Folks who wager on sports games or play parlay cards always win.
4. Folks who speculate on risky investments always win.

It's a great world for gamblers, isn't it?

Another thing I've learned on forums is that if someone has success at something someone else will poo poo it and say it can't be done just because they can't do it.

 

[geeky_grrl]

The only individual stock I have is my old megacorp's stock I received while I was employed. I've been divesting it since my retirement but it will probably take me a few more years to sell it all.

 

[triangle]

Greetings everybody....

I have early-retired, I am 46 and retired about a month ago. I'm a bit worried about writing my whole plan here....because my SWR is over the magical 4% and I don't want to be taken to the woodshed

My question for the group is regarding equities.

Does anybody here use SOLELY mutual funds and ETFs....wit no individual stocks and what are people's thoughts about that.

My hopefully realistic goals are to *average* a 5% annualized return meaning some years might be +20%, some years might be down 20%....but overall, if I can average 5%, things should be ok. Any more than 5% is gravy - much welcomed gravy.

Thanks!

If future returns are anything close to historical average, then I think about any strategy you choose will work. A broad based index fund could be a good choice. Of course inflation and actual returns may not be the same as the past, but I would think you would still make it if you decided on some combination of growth and value and income funds (as long as fees are not excessive), though trying to create that combination might also look similar to a single broad based ETF.

I think it is just as important for you to decide how much cash or near cash equivalent to keep on hand to avoid being forced to sell at some low point in the market (for example like in March 2020).

 

[W2R]

Doing the necessary research to know what individual stocks to own, and when not to own them, is work. As a retired person I try to avoid as much of that as I can, so no individual stocks for me.

+1 Same here. I stick to broad mutual funds.

 

[Onward]

NO individual stocks allowed in my portfolio.

I'm a lousy stock picker.

I suspect you are too.

 

[CincyDave]

I have around 10% of my equity holdings in individual stocks, but only because I enjoy researching and picking them. I don't think there is a "need" for them if you don't want to.

 

[Closet_Gamer]

MFs & ETFs, all indexed with a pretty strict AA....

...except for small play account that is less than 1% of my net worth. In there, I allow myself to roam free. Including occassionally snorting the cocaine of investing: options.

 

[srblanco7]

At present all in mutual funds.

At one point, held a fairly significant portion (1/3) of our net worth in company stock. This was resolved a couple of years ago with company sale to a larger competitor.

 

[gauss]

I have been retired for several years, although we do have pensions funding a portion of our current spending.

My plan does not rely on holding any individual stocks.

That being said, I will occasionally buy and sell stocks with some fraction of my retirement funds when/if I have the time and interest.

I have the same sentiment as posted by @CincyDave a few messages above.

Given the pensions & SS to come, my WR is significantly lower than the standard 4%, so this may afford me the luxury to dabble in individual stocks without risking my retirement -- or in my case, the ability to sleep well at night.

-gauss

 

[target2019]

Greetings everybody....

I have early-retired, I am 46 and retired about a month ago. I'm a bit worried about writing my whole plan here....because my SWR is over the magical 4% and I don't want to be taken to the woodshed

My question for the group is regarding equities.

Does anybody here use SOLELY mutual funds and ETFs....wit no individual stocks and what are people's thoughts about that.

My hopefully realistic goals are to *average* a 5% annualized return meaning some years might be +20%, some years might be down 20%....but overall, if I can average 5%, things should be ok. Any more than 5% is gravy - much welcomed gravy.

Thanks!

We understand that your SWR is over 4%, and you're looking for 5% return. Is that real return or what? I happen to use a flat 5% with STD Dev of 8% in my planning, and that's with a 50/50 portfolio. Depending on your asset allocation (nobody knows yours), your returns will range from something to something else. You see the details mean a lot. I couldn't reverse the numbers and deduce anything about your AA.

This is my WAG about most here, and how they handle index funds, stocks, etc. The investors here are all above average, and have equity allocation 0-100%, and 0-100% individual stocks.

And, yes, you're going to the woodshed for a bit. The most outspoken recommendations are not necessarily the norm, or what most people here do. And the sample size of respondents is very small. The forum population is more like you than posters on Reddit investing group, for sure.

We have about 85% apportioned to broad mutual funds and ETFs (Roth and IRA and SEP-IRA and 403b). The other 15% is in a taxable brokerage with a collection of inherited assets and gifts, and that is being continuously simplified to mostly a few ETFs.

Are we typical? I have no way of knowing. Even a poll would not tell you about this forum population in a way that would tell you what to do or not do.

If you have a plan and won't describe it, at least in general terms, then it may be that you don't have 100% belief in it.