Own no stocks? anyone else?

[copyright1997reloaded]

As a % of Total Net worth (not counting real estate):
Individual equities: 30%
Stock Mutual Funds: 37%
Fixed/cash: 30% (both individual such as iBonds, Tips, and mutual funds)
Other: 3%
The market rising is pushing my equity ratio higher, back up to 67%.

 

[GrayHare]

Then sell that stock and keep the difference, when allowed, usually annually.

ESPP stock provides a way to continue contributing to an IRA after FIRE. If you hold ESPP stock past FIRE, you can sell portions in later years, and in most cases the company will issue you a W-2, which means the sales are considered earned income. With earned income you can then contribute to an IRA.

 

[haha]

Our entire retirement savings has been based on 401Ks and IRA funds, also counting on some pensions. We own no stocks themselves. Our funds tend towards 60/40 AA currently, equities/bonds.


Have we been missing out on something? ... poor diversity?
Any thoughts out there?

This is usually not what people mean when they say that they own no stocks. You may not own stocks, but your exposure is the same as someone who has a diversified portfolio of individual stocks.

Ha

 

[kgtest]

ESPP stock provides a way to continue contributing to an IRA after FIRE. If you hold ESPP stock past FIRE, you can sell portions in later years, and in most cases the company will issue you a W-2, which means the sales are considered earned income. With earned income you can then contribute to an IRA.

Interesting. Learn something new everyday. I'll be sure to see if this is the case when I leave mediumCorp. I have a hard time calling it mega since its really just a regional operation.

 

[ocean view]

ESPP stock provides a way to continue contributing to an IRA after FIRE. If you hold ESPP stock past FIRE, you can sell portions in later years, and in most cases the company will issue you a W-2, which means the sales are considered earned income. With earned income you can then contribute to an IRA.

I’m not sure this is correct. A disposition of ESPP shares will only be included in W2 income if the sale is a disqualified disposition, which means the holding period (IIRC is 2 years from date of grant AND 1 year from purchase) has NOT been met.

What you have described would happen only if you buy espp shares in final work year and then sell the same lot of shares in ER year 1 (or maybe ER year 2 depending on timing). You may get a w-2 with ordinary income for the purchase discount. But beyond the holding period, this is just regular cap gains.

 

[brokrken]

You guys got me thinking so I just checked.


Individual Equities - 38%
Equity Funds - 39%
Individual Bonds - 2%
Bond Funds 4%
Preferred Stocks - 2%
Cash - 8%
Other (Private Lending, business ventures, etc) - 6%


Looks like I'm missing 1%, but that's just rounding.

 

[GrayHare]

I’m not sure this is correct. A disposition of ESPP shares will only be included in W2 income if the sale is a disqualified disposition, which means the holding period (IIRC is 2 years from date of grant AND 1 year from purchase) has NOT been met.

What you have described would happen only if you buy espp shares in final work year and then sell the same lot of shares in ER year 1 (or maybe ER year 2 depending on timing). You may get a w-2 with ordinary income for the purchase discount. But beyond the holding period, this is just regular cap gains.

The reporting probably depends on one's megacorp. If it appears on Box 1 of your W-2, you're good to fund an IRA:

https://ttlc.intuit.com/questions/4...spp-can-i-use-this-to-fund-a-conventional-ira

Ed Slott usually has these details well covered, but I could not find any mention at his site.

 

[UnrealizedPotential]

I do not own any individual stocks. In 1999 I owned CMGI and Dell. CMGI went bust and I sold Dell, that was in 2000. I lost 5K in CMGI. Lesson learned. Ever since then it has been ETF's or mutual funds for me.

 

[gwraigty]

I do not own any individual stocks. In 1999 I owned CMGI and Dell. CMGI went bust and I sold Dell, that was in 2000. I lost 5K in CMGI. Lesson learned. Ever since then it has been ETF's or mutual funds for me.

CMGI. My million dollar mistake. I lost money also buying and selling that dog. A few years after I dumped it for good, my husband came home from work and said that some of the guys had been talking about CMGI. I said, "Oh no!" Yep, when I checked to see how much our 5K invested several years earlier would have been on that day, yep, it would have been worth over a million. No serious regrets though. I couldn't stomach the volatility of that one.

Even when I thought I was being more conservative...GE, C, lost money on those also. I'm a horrible stock picker, so I haven't bought individual stocks in a long time. I went ultra-conservative and started buying CDs about 18 years ago and slowly ventured into individual corporate and muni bonds. It suited my temperament more, I think. We mainly hold individual bonds and recently have ventured into bond mutual funds/ETFs, and preferred stock ETFs. We've generated enough income to replace my husband's paycheck, if needed. I'd like to venture a little more into stocks using funds/ETFs, but not today.

 

[RobbieB]

I own nothing but individual stocks and individual bonds. No funds of any kind.

 

[target2019]

Have about 5% in a brokerage, with individual stocks, and an ETF or two. Over time we're diversifying one larger company stock in the account. The portfolio return YTD is 21.91%.

Everywhere else we are holding boring mutual funds. AA is like 52-42-6 (equity-bond-cash).

 

[HI Bill]

I have a friend who lost a ton in the markets prior to 2008, and holds no equities in any form whatsoever. Real estate and cash only!!!

 

[Walt34]

No stocks here either. I showed my stock-picking acumen when I did not buy America OnLine because I thought the interface was so dumbed down that "no one would pay for that silly stuff". At the time I did have an Internet connection via a PC user group but the interface was UNIX.

Index funds only. I'm pretty sure that a monkey throwing darts at the WSJ would do better than having me pick stocks.

 

[38Chevy454]

Like many previous replies, I did have some company stock in my 401k along with mutual funds, but since retirement, I moved everything into IRA and invested in widely diversified mutual funds. No individual stocks owned by me directly.

 

[Tom52]

We have about 10% of net worth in about 20 different dividend paying stocks that were inherited. The only other stock we own is BRK B which was purchased about 4 years ago. It is doubtful we will add any additional individual stocks in the future, but we are looking forward to sometime in the future when we will take the dividends instead of reinvesting .

 

[6miths]

Been awhile since I have had any individual stocks. Index ETFs.

 

[l8_apex]

No stocks, no funds, nothing along those lines.

All real estate and notes payable.

 

[Offgrid Organic Farmer]

Own no stocks? anyone else?

I do not own any stocks.

I was booted out of the military Active Duty after serving 20 years and put onto pension.

We own a farm and an apartment complex.

No 401K, no IRA

 

[53anddone]

I have about a third of my portfolio in blue chip, dividend paying stocks diversified so no individual stock represents more than 2% of the total portfolio.

 

[Bryan Barnfellow]

OK, I'm one of the outliers in the forum, so get ready Bogleheads

During my w*rking years I built a (taxable) concentrated portfolio of 20 US stocks, whose dividends now provide 40% of our annual income. Mostly blue-chip proven dividend growth equities, two highly ranked REITS, and the two top BDCs. Very conservative, long time holder...rarely trade unless something bad is in the wind. I monitor them carefully and take the long view. So far this year, this portfolio has increased dividends by over 6%, so inflation is covered.

The balance of our income (60%) comes from a mix of two single payment immediate annuities, Swiss social security, and US social security payments for both of us. We also own 5 funds in Vanguard, in Roths and traditional IRAs, which as yet aren't used for income purposes.

-BB

 

[jetpack]

I own some stocks. I wish I owned more. The main reason is that they can be more tax efficient than the funds. For example, if you don't sell any winners, you don't have capital gains. Also, you can do tax loss harvesting. (only problem with that now for me is that I don't have any stocks in the minus column!)

And, no fees in holding them. (and I got free trades for buying and selling, so none there either)

 

[thepalmersinking]

The thing about stocks is you need to look for trends in society and business and then backtrack to the companies providing the product or service. Then simply perform research on them by reading annual reports and listening to quarterly earnings calls.

It can become a hobby.

 

[thepalmersinking]

You are kidding yourself if you think mutual funds and ETFs are a magical way to be safe in equities. All you need to do is to look at their historical performance in 2008 and you will they performed horribly. Are made of up of stocks.

I prefer Index ETF’s over mutual funds. If you go this route then at least track the top holdings in the ETF.

 

[Bryan Barnfellow]

The thing about stocks is you need to look for trends in society and business and then backtrack to the companies providing the product or service. Then simply perform research on them by reading annual reports and listening to quarterly earnings calls.

It can become a hobby.

Yes, and for some like me, an immensely satisfying one! I have learned so much about healthcare, technology, real estate, small business finance, the oil industry, insurance, consumer products, etc.

That said, my instructions for my wife in case of my early demise is to liquidate the portfolio and reinvest in a defined set of mutual funds that she need pay little attention to. She's a poet, so...

-BB

 

[imoldernu]

Three old stocks about 10K that we never look at. Came with leaving a job back in the 60's.
No investment funds.
Small annuity 4% return
Old IBonds that we touch every three of four years.
Income from Social Security, plus interest from bonds, pays our cost of living.

Are we getting richer? No... but neither has our net worth changed in the past 30 years of retirement.

Safe?... no... not if we both go into LTC for 6 years.

Hmmm... saw an ad today for help wanted at an Amazon warehouse... Maybe will ask Jeanie if she feels up to applying.