Author Topic: Cash out and convert or hold the course?  (Read 2176 times)

Exprezchef

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Cash out and convert or hold the course?
« on: January 17, 2016, 10:35:44 AM »
At the very end of 2015 I finally fired my "financial advisor" and converted my actively managed investment account to a self-directed account. Thanks to advice gained here and realizing how much money I was spending each year on his "advice" it was a no-brainer to let him go. What really opened up my eyes was the PBS show "The Retirement Gamble". Between his fees and the mutual fund management fees, it had been killing my long term portfolio value. Thank you to whoever posted the link to it on this site.

Anyway, I have already used some extra cash I had laying around and started the process of setting up a 4-fund portfolio with Vanguard ETF's which I purchased last week. I am not sure what to do with my currently owned stocks and mutual funds. With the recent market downturn these past few weeks, I am reluctant to sell everything and convert it over to the Vanguard options. Some of my stocks have lost almost half of their value from their high last year. I don't want to get into the "buy high/sell low" trap. Since I am just going to use the money from the sales for purchasing the Vanguard ETF's should I look at it as a wash and think long term and just pull the trigger? If it matters, the current portfolio value is just under $300K and is a mix of individual stocks and various mutual funds.

Derrian

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Re: Cash out and convert or hold the course?
« Reply #1 on: January 17, 2016, 11:33:26 AM »
The buy low sell high is really only an issue if you truly leave the market. Switching mutual funds isn't leaving the market but shifting your allocation to be in line with your goals. As for how to go about this, it depends on where your funds are located. If they are in tax deferred/advantaged accounts, I would first cash out the mutual funds to get away from high fees. If it is individual stock, I would act accordingly with my investment policy statement (i.e. does owning individual company stock still make sense for you). If your funds are in a brokerage accounts, I would sell in a way to minimize taxes.

seattlecyclone

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Re: Cash out and convert or hold the course?
« Reply #2 on: January 17, 2016, 11:48:35 AM »
Yeah, sell and reinvest in better options. It's actually better to do this when the market is on the way down because you'll probably have your funds in cash for a few days. Better to miss out on a few days of market losses than a few days of market gains! Plus if you have any money in taxable accounts, selling low means less capital gains tax to pay on the transition.

Exprezchef

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Re: Cash out and convert or hold the course?
« Reply #3 on: January 17, 2016, 10:00:55 PM »
Thanks of the help. Wish me luck. :)

Kaspian

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Re: Cash out and convert or hold the course?
« Reply #4 on: January 18, 2016, 08:48:23 AM »
I am not sure what to do with my currently owned stocks and mutual funds. With the recent market downturn these past few weeks, I am reluctant to sell everything and convert it over to the Vanguard options.

If that money was already in Vanguard options, would you sell it?  If not, ask yourself why--because this is the same question as to whether to buy.