Simplifying My Portfolio

[Vincenzo Corleone]

Question that's probably a no-brainer for most of you:

My portfolio has gotten unwieldy over the years and I'd love to simplify it, if for no other reason than to make things easier for my wife when I'm gone.

A portion of the portfolio is invested in managed equity mutual funds that I've held for at least 25 years. I'd like to sell those off and put the proceeds in Vanguard Total Stock Market Index Fund (VTI) or something similar. Dividends and capital gains distributions thrown off by the managed funds have been reinvested in their respective funds for the past 25 years and I've made some periodical contributions after my initial investment in some of them.

In addition, I have individual stocks in which I have a loss. I envision selling my managed mutual funds and offsetting realized capital gains with the realized losses of the individual stocks I'd sell.

My question: since I held those managed mutual funds for 25 years, I think - between the reinvested dividends/capital gain distributions and the periodic additions - figuring out my cost basis would be pretty difficult. How should I go about doing so? Thanks.

 

[DrRoy]

Sometimes the mutual find company has kept track of it. If not, see if you have any records. Your tax return paperwork may have something. Last resort is to estimate how much $ was invested each year, and you can look up a typical price for the year, and that would be your best guess.

 

[Markola]

It doesn’t sound as if you have a clear plan yet for what you’ll buy instead but you want to keep it simple and you’re interested in index funds. As part of your research, you might like to read the short but persuasive book, “The Three Fund Portfolio” by long time Boglehead, Taylor Larrimore. There’s hardly anything simpler than that.

https://read.amazon.com/kp/embed?as...e=kpe&ref_=cm_sw_r_kb_dp_MTQVXXDN6ZMCAMYGPC4N

 

[MarieIG]

Question that's probably a no-brainer for most of you:

My portfolio has gotten unwieldy over the years and I'd love to simplify it, if for no other reason than to make things easier for my wife when I'm gone.

A portion of the portfolio is invested in managed equity mutual funds that I've held for at least 25 years. I'd like to sell those off and put the proceeds in Vanguard Total Stock Market Index Fund (VTI) or something similar. Dividends and capital gains distributions thrown off by the managed funds have been reinvested in their respective funds for the past 25 years and I've made some periodical contributions after my initial investment in some of them.

In addition, I have individual stocks in which I have a loss. I envision selling my managed mutual funds and offsetting realized capital gains with the realized losses of the individual stocks I'd sell.

My question: since I held those managed mutual funds for 25 years, I think - between the reinvested dividends/capital gain distributions and the periodic additions - figuring out my cost basis would be pretty difficult. How should I go about doing so? Thanks.

Call the respective fund companies. I did that with mine. With one which I inherited from my mother, they lost the information, but by me giving them the date of death (in light of me not having removed funds) they were able to recalculate the cost basis.

With three other long held mutual funds, I was able to get a cost basis - even where one of the funds was absorbed by another fund company. Good luck.

 

[TripleLindy]

A couple of years ago, I sold some stocks that I had held for more than 15 years. I was pleasantly surprised at the accuracy of cost reporting provided by the investment platform, includes reinvested dividend, stock splits, and spin off of a portion of the company (which explained some shares that I had no idea of where they came from.) I thought there was some law passed a few years ago that required the cost basis to be reported, but I could be mistaken and there could be time limits.

In terms of simple investment models, you may want to explore Scott Burns and his Couch Potato model - 50/50 split of total stock market (VTI) and total bond market (TIPS or BND). You can play with ratios based on your risk tolerance, but it doesn’t get much easier and takes all of 10 minutes per year to manage, assuming annual rebalancing. He also has other models, all of which are equal ratios of varying funds, with the underlying concept of low cost index funds because costs matter.

Good luck!

 

[joesxm3]

Watch out for covered vs non covered shares. TRP treated them separately and the older non covered shares had much larger unrealized gains. When I sold they did average cost basis separately and defaulted to selling non covered leaving me with a larger taxable gain than expected.

 

[Sunset]

I'd turn off the reinvestment right away..

This will simplify future selling of the fund, and OP can take the $$ generated and simply buy what is desired (ex VTI , TIPs).
I would not buy BND now. Personally I'll never buy BND again, I'll just buy various Treasuries, CDs, Bonds, etc..

 

[Chuckanut]

A friend recently pointed me towards this article. He has Total US stock market index funds in two brokerages (Vanguard and Schwab). The rest of the money is in CDs and short term bonds under one year maturity. Yes, I realize he picked a very good 5 previous years for being 75% in stocks. This year he is suffering with the stock market like all of us.

But the 25% cash is a great buffer. He has modified the definition of cash to include bonds of one year or less duration which he considers cash-equivalents. YMMV with that decision. He has survived the bond crisis well since it has mostly CDs, MM funds and no bonds with a maturity over one year. He also has a small fixed pension and took SS at FR age not at 62 like many do. That helps a lot when the market drops.

He taps his cash AA assets to help meet expense. He balances one a year. Until this year he has been using the stock dividends and sometimes selling stocks to replenish his cash AA. This year may break that pattern.

It's an interesting idea for simplifying one's investments. Note that this article was written in 2015 well before today's bond market weakness.

https://awealthofcommonsense.com/2015/03/an-alternative-to-the-6040-portfolio/

Bernstein went on to show that up to that point, a 75/25 portfolio outperformed a 60/40 portfolio more times than not. I decided to run the numbers on this portfolio and compare it to the simple 60/40 stock/bond portfolio. Here are the results, broken out by decade, for a 75/25 portfolio made up of stocks and cash and a 60/40 portfolio made up of stocks and bonds*:

 

[Koolau]

It doesn’t sound as if you have a clear plan yet for what you’ll buy instead but you want to keep it simple and you’re interested in index funds. As part of your research, you might like to read the short but persuasive book, “The Three Fund Portfolio” by long time Boglehead, Taylor Larrimore. There’s hardly anything simpler than that.

Unless it would be Scott Burns "Couch Potato" portfolio (as few as 2 funds IIRC.)

To me, simplifying is as much about moving funds to one custodian as it is about reducing the number of funds.

I just sold a small fund I had been hanging onto (call it a case of inertia) held by what used to be Oppenheimer. They charged $25/year for the privilege of managing the account. Heh, heh, not any more. So, now I only have my 401(k) and V. (Of course, DW has her own account outside of V - so there's that) YMMV

 

[38Chevy454]

I think your plan is good, especially since now is a good time to do the tax loss harvesting. Hopefully your brokerage has the details of the cost basis. Simplifying is good, and an overall market fund like VTI is a good choice for low fees vs your current managed funds.