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Nearing retirement & migrating to index funds

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  • Avatar XX17P 
    Participant
    Status: Dentist
    Posts: 43
    Joined: 09/10/2018

    As a long time saver, consistent investor, and debt adverse, I plan to greatly reduce my clinical practice or fully retire in a few short years prior to my 60th birthday.  I have used financial advisors over the years.  As many of you, I have worked more that I should have.  My aha moment where my thoughts were confirmed ~ April 30,2016.  While watching the Berkshire Hathaway annual meeting, Buffett confirms that index funds can’t be beat.  As you have guessed, my financial advisor does NOT have me in index funds.  While the market (and to some degree my advisor) has rewarded me so that I can retire early, I still have a few decades to invest.  My first instinct is to take the Fire your Financial Advisor course. Another thought is allow a fee only financial advisor to re-evaluate my portfolio for several grand.   There are certainly tax implications in selling investments that have sizeable gains.  I wish to be a good steward of my families money/investments.  This is intended to be a general question since there is no specific knowledge of the portfolio.  What does the tribe recommend as a logical way to move forward.  Your thoughts and consideration are greatly appreciated.

    #191205 Reply
    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4405
    Joined: 01/08/2016

    Post your account, let us pick it apart, then when you see a professional or take over you have something to compare.

    But simplest is any tax advantaged account can be immediately rectified.

    #191207 Reply
    Liked by ENT Doc
    Avatar XX17P 
    Participant
    Status: Dentist
    Posts: 43
    Joined: 09/10/2018
    This is intended to be a general question since there is no specific knowledge of the portfolio.

    Click to expand…

    I did not wish to get too far into the weeds with this statement and elaborate about the portfolio.  Just interested in general direction.

    #191208 Reply
    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4405
    Joined: 01/08/2016

    General direction -> pick index funds that support your overall AA.

    #191209 Reply
    Liked by Tim, ENT Doc
    Lithium Lithium 
    Participant
    Status: Physician
    Posts: 1174
    Joined: 02/15/2016

    Work on figuring out how to extricate yourself from an unsatisfactory financial advisor.  Turn off dividend reinvestment and stop sending new money in.  Figure out where you want to invest next (Vanguard, Fidelity, Schwab, etc.), then start a brokerage transfer.

    I haven’t done the FYFA course but it sounds like a high-yield way to learn.

    #191211 Reply
    Liked by Hank
    ENT Doc ENT Doc 
    Participant
    Status: Physician
    Posts: 3500
    Joined: 01/14/2017

    Any tax-protected account holdings can be sold without tax implications. Your taxable account is going to be your biggest worry. Steps I’d take:

    1. Take over your investments
    2. Stop contributing to the non-index investments
    3. Contribute to index investments per your asset allocation
    4. Turn off dividend reinvestments. See #3 as to what to do with dividends and interest.
    5. Sell lots at a loss and offset them with lots at a gain. See #3.
    6. Sell any egregious investments like active funds with high ERs. See #3.
    7. Sell the remaining in your first few retirement years and live off this income, pay little to no tax based on favorable dividend and cap gains rates.

    #191222 Reply
    Liked by Lordosis, Hank
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3030
    Joined: 09/18/2018

    1)Come up with both a taxable and non-taxable AA and the low cost funds you will use.
    2) pop you numbers in a retirement planner with you planned withdrawal rates and see that it makes sense.
    3) Pick where you want to park you accounts,
    4) Move them on Monday morning.
    Non-taxable: Sell everything and by your AA.
    Taxable: Sell all your losers and figure out how to get rid of the LT gains efficiently (like offset your lt losses).
    5) Figure the Year taxwise when to dump the stocks.
    All new money and dividends go into the new allocations. Don’t forget, stocks were bought with future gains in mind. Don’t let the tax tail wag the investment choice, future losses aren’t beneficial.

    #191240 Reply

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