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Portfolio Cleanup

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  • Portfolio Cleanup

    Hi everyone,

    I am a resident starting my 4th year of a 5 yr residency. My wife just graduated as a pediatrician and will start a new job making ~180k. We have -200k of student loan debt. I am just starting to learn about finances and trying to get things in order. We have contributed to a Roth IRA for both of us the last three years but had not utilized the residency sponsored 403b because there is no match. I have a taxable account started by my grandparents when I was a kid with ~50k in various indivual securities (MSFT, AAPL, GOOG etc). After reading the WCI books I was thinking about selling these individual stocks and eating the associated cap gains tax in order to invest in index funds. My question is should I reinvest the funds immediately into index funds in the taxable account or use them to act as salary/ spending money so that I can divert my actual salary into the 403b? If I should go with the 403b should I use the Roth option since we arent in our maximum tax bracket yet?

    Additional considerations: Likely planning to buy a house in 2-3 years when residency is finished and need to save for down payment, so the additional liquidity of a taxable account might have some benefit.

    Thanks in advance

  • #2
    no reason to pay taxes.
    donate, TLH, etc. would just not add new money.

    save 20% to retirement. which is.......


    • #3
      There's just no way to tell. If you need to rebalance, you'll have to liquidate. For the long term, that's probably best option. I would not use a taxable account for downpayment liquidity, though. If you're going to buy in the next few years and will need that money, the best thing to have it in is cash. However, you may not have to have that money and i'm not your FA or CPA. iow, there are just too many unknowns and this is a free resource - I wouldn't base a decision on this thread, just use as food for thought and keep prowling through all of the info here.
      Financial planning, investment management and CPA services for medical and high-income professionals | 270-247-6087


      • #4
        I agree with Peds , you don't necessarily have to sell them at this time but since you'll be in the 15% capital gains tax, I'd probably just pay the tax now and get them into something more appropriate.


        • #5
          Contrarian view: If you own mainly all mega-cap stocks like the ones you listed above, I would hold on to them for a few reasons:

          1) Those mega caps are the ones which mainly move the S&P as a whole, so even though it's not as ideal as owning the entire market, it's not that bad really.
          2) Depending on your outlook, tech/remote work will continue to rise rest of 2020 and parts of 2021, so if you were to own individual stocks, those large stable tech companies are not bad choices imo. In fact, I would buy more Amazon.
          3) 50k may sound like a lot, but after a few years of saving as an attending, it won't really make a difference. No point paying capital gains tax. Hodl.