Hi all!
Investing question, with a bit of backstory:
I inherited some stocks in a Merrill Lynch managed fund (taxable account) when my father died, almost a decade ago (in my mid-20s). Since that point, my husband and I have used some of those funds towards buying a house, but the remainder has grown to almost $80K in stocks and $6K in cash (a 160% gain over that period). We've also started our own SEP IRAs through our business and each invested around $26K over the last few years with the same advisor -- those haven't done as well; one's gained around 5% and the other's lost 5%, so breaking even from that perspective.
Anyway, while we are happy to see how well the taxable account has performed, between MMM and John Oliver, we've seen the benefits of index fund-based investing, and are looking into switching -- overall, I think we pay around $1000 per year in management fees, which I know is too high. Also, while the primary account continues to perform well, I do worry about the lack of diversification -- 1 stock represents almost $30K of the portfolio value, so I'm concerned about a major drop if something went south with that company.
In terms of a switch, looking for recommendations re:
- Should we do an in-kind transfer to Vanguard to keep the existing stocks, and just invest the cash portion in mutual funds? This would keep up (hopefully) the great performance of the taxable account, though may still leave us vulnerable if one or more of the investments went south. (We may still switch over the SEPs to index funds in that case, since those haven't performed nearly as well.)
- Or cash out the stocks entirely and make a full switch to index-based funds? If so, we may go for Betterment (where we already have a small taxable account) to make the most of tax-loss harvesting and the automated rebalancing plan, being novice investors (open to learning more, but one step at a time). Doing this, I assume we would need to pay capital gains tax on the taxable plan? Is this also true of the SEPs (though only one has made any profit)?
Possibly we could try a hybrid where we sell off a portion of the shares and keep some -- after examining our portfolio in more detail, I'm just a bit concerned that we're putting all our eggs in just a few baskets, and given that the advisors rarely suggest changes to the portfolio (once every couple years), I think we could probably periodically make changes on our own. I think they've made good choices by and large, but they're used to working with much bigger portfolios than ours, so the risk isn't as spread out as it should be.
Anyway, would love any feedback!