Author Topic: Transitioning my portfolio to broad market index funds  (Read 801 times)

AJDZee

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Transitioning my portfolio to broad market index funds
« on: March 21, 2023, 12:56:28 PM »
Did anyone else go through a 'mental block' (read: stress) as they decided to transition their portfolio to the 'buy and hold broad index funds' philosophy?
Is what I'm experiencing a common phenomenon?
Looking for any success stories from those who made this transition and enjoy their time back NOT looking at earnings reports, doing DCFs, watching analysts or geo-political trends, reading tea leaves, etc...

I've finally reached the point where I just want to consolidate and simplify my portfolio to a couple index funds.
But I'm having trouble pulling the trigger, even though I know it's for the best...

Right now my portfolio is a hodge-podge of holdings, more or less reflects how I've changed as an investor over the years.
I started as a dividend investor, so I've got many aristocrats I've held onto for 10+ years.
I hold a couple bangers I got lucky on, i.e. buying and holding Apple, MCD for the last 10 years.

...And then I have a graveyard of failed stocks/ETFs that are in the red and just sitting there because of the emotional response to selling at a loss  - This is the WORST thing I can do, I know.

I could sit down and go line-by-line and argue why I should hold onto each one... but at some point it feels like I'm on an investing version of the TLC show 'Hoarders' lol
I don't want to sell my losers because 'they might rebound', and I don't want to sell my bangers because I love seeing the impressive % return.

Guys this is my dirty little secret :| I've been on MMM longer than most here and never truly adopted the simple investing strategy.
The larger my portfolio grows, the more I need to simplify and can't play these games any more.

Performance aside, I'm most excited to get my time back instead of logging in so often to check up on things...

Financial.Velociraptor

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Re: Transitioning my portfolio to broad market index funds
« Reply #1 on: March 21, 2023, 01:45:01 PM »
Whether you index or pick, selling your losers is good policy.  It's a lot like pruning a tree or weeding a garden...

ATtiny85

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Re: Transitioning my portfolio to broad market index funds
« Reply #2 on: March 21, 2023, 01:51:16 PM »
Yeah, sell the losers and invest the proceeds into a Total Stock Index (assuming this is the way you want to evolve.)

Additionally, turn off any automatic reinvestment of distributions, and route them into a Total Stock Index (assuming this is the way you want to evolve.)

Those two were easy steps for me, and then also (of course) all new money went into a Total Stock Index (because that was the way I wanted to evolve.)

I still have some legacy positions that are held due to tax considerations, but over 95% (and growing) of our portfolio is simply big ole Index funds, and I could not be more relaxed when it comes to our investments.


cincystache

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Re: Transitioning my portfolio to broad market index funds
« Reply #3 on: March 21, 2023, 05:03:13 PM »
I understand where you're coming from, I used to pick single stocks before I discovered MMM and index funds. Luckily I was terrible at it and I'm inherently lazy so it was an easier transition. You could always dollar-cost-average OUT of your individuals and into index funds that way it lessens the drama if things swing wildly. Your head is in the right place. Indexing certainly reduces the stress and saves a ton of time and mental bandwidth that can be better spent on anything else in your life. Good luck making the switch and yes, watch out for taxes if we're talking taxable accounts.

AJDZee

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Re: Transitioning my portfolio to broad market index funds
« Reply #4 on: March 21, 2023, 06:59:01 PM »
Good tips, will do

Unfortunately I don't have the problem of taxes yet, all in registered accounts. Except of course withholding taxes in certain accounts.

I sorta am doing the 'dollar cost out' as you say lol
I've given myself a $ goal to sell every week for the last few weeks, and pick the holdings that are 'up' (this is me grasping at nickles and dimes)

MustacheAndaHalf

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Re: Transitioning my portfolio to broad market index funds
« Reply #5 on: March 21, 2023, 08:14:18 PM »
Have you read any books on behavorial investing?

Try not to view it as a personal failing, but as an example of human behavior than many people share.  I'd suggested reading about "anchoring bias" first:
https://www.investopedia.com/terms/a/anchoring.asp

Heckler

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Re: Transitioning my portfolio to broad market index funds
« Reply #6 on: March 21, 2023, 11:43:28 PM »
Read up on, and create your IPS.  Then implement it the next day you've finalized it.  Maybe even print it out and sign it for good measure?

<edit> Since you're likely Canadian, support the bogleheads sister site:

https://www.finiki.org/wiki/Getting_started#Create_an_investment_plan



https://www.bogleheads.org/wiki/Investment_policy_statement

If that doesn't work, go onto boglehead forum and ask.  :)
« Last Edit: March 21, 2023, 11:47:01 PM by Heckler »