Extremely Simple Stock Question

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dualstow
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Extremely Simple Stock Question

Post by dualstow » Tue Mar 17, 2020 8:41 pm

{So this is what the forum looks like outside of the Other section, eh? Nice and clean}.

I have some small cap blend and mid cap blend stock index funds that I bought when I got into indexing. I had a slew of individual stocks and I bought those two funds to round things out instead of selling the indies.

For a while I pared the indy stocks but now I actually have more $ in them. They grew and I didn't really curb my habit. I bought more indies, and the new ones weren't necessarily large cap, which makes small- and mid-cap funds unnecessary now.

I started buying VTSAX anyway, with new money and with the proceeds of sales. // Total Stock Market fund.
Started a few years ago.

Things have fallen so hard that these funds now show a gain of about $10K each. Compared to December, that's like a gain of zero.
(It'll be up a bit more tomorrow morning, for sure). My VTSAX is actually a bit in the red, but I'm not rich enough to tax-loss harvest.

I think I can sell them and put all the proceeds into VTSAX, something I've wanted to do for a long time. I didn't want to generate a big tax bill, but I don't think these gains will have much of an effect. I'll finally have a single fund alongside the indy stocks.

Any reason I shouldn't do this?
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Re: Extremely Simple Stock Question

Post by Cortopassi » Tue Mar 17, 2020 9:02 pm

Mentally, having fewer holdings has always been beneficial for me.
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Re: Extremely Simple Stock Question

Post by dualstow » Wed Mar 18, 2020 10:11 am

Thanks. Going to get it done today then.
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Re: Extremely Simple Stock Question

Post by KevinW » Wed Mar 18, 2020 9:14 pm

Cortopassi wrote:
Tue Mar 17, 2020 9:02 pm
Mentally, having fewer holdings has always been beneficial for me.
+1, seems like a good opportunity to consolidate and simplify, with a low tax bill.
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Re: Extremely Simple Stock Question

Post by dualstow » Wed Mar 18, 2020 10:18 pm

I did the small caps today. Mid caps tomorrow. Feels good.
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Re: Extremely Simple Stock Question

Post by jalanlong » Thu Mar 19, 2020 8:07 pm

I am also a minimalist and like to keep things simple. If my life savings is $500k, would you guys feel comfortable having it all in 4 ETFs? Say VTI, TLT, AAAU and GBIL?
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Re: Extremely Simple Stock Question

Post by dualstow » Thu Mar 19, 2020 8:12 pm

^ I'd never heard of GBIL ^
For anyone else who hasn't ⇢ https://www.gsam.com/content/gsam/us/en ... r-etf.html
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Re: Extremely Simple Stock Question

Post by Kbg » Sat Apr 11, 2020 9:29 am

Yes I would feel comfortable with four ETFs. If you are serious about safety in the modern world and modern markets then perhaps something like this:

VTI
SCHQ
IAU
GBIL

This gives you low cost ETFs with four systemically large financial companies. If you like other ETFs for the four components then just switch the ETF companies. The main points being large systemically important and low cost. Don’t get distracted by things that don’t really matter.
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Re: Extremely Simple Stock Question

Post by doodle » Sat Apr 11, 2020 10:30 am

The only thing I do that complicates things a bit is keep some of each of the four assets in taxable and non taxable accounts so that depending on what needs to be rebalanced I can either tax loss harvest or sell without paying capital gains...especially gold ETFs which get hit with high long term collectible capital gains tax.
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Re: Extremely Simple Stock Question

Post by jhogue » Sat Apr 11, 2020 10:52 am

Kbg wrote:
Sat Apr 11, 2020 9:29 am
Yes I would feel comfortable with four ETFs. If you are serious about safety in the modern world and modern markets then perhaps something like this:

VTI
SCHQ
IAU
GBIL

This gives you low cost ETFs with four systemically large financial companies. If you like other ETFs for the four components then just switch the ETF companies. The main points being large systemically important and low cost. Don’t get distracted by things that don’t really matter.
I like the idea of simplifying with ETFs, especially when I get too old to manage my assets.

The question, that I have, however, is whether you would combine all for ETFs into a single brokerage account. Or do you need to have 4 accounts in 4 s"systemically important" firms?
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Extremely Simple Stock Question

Post by dualstow » Sat Apr 11, 2020 11:01 am

jhogue wrote:
Sat Apr 11, 2020 10:52 am
Or do you need to have 4 accounts in 4 s"systemically important" firms?
That doesn't sound much like simplifying. O0
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Re: Extremely Simple Stock Question

Post by Smith1776 » Sat Apr 11, 2020 2:05 pm

The idea of different accounts wasn't lost on Browne. In Fail-Safe Investing, Browne recommended splitting up cash between 3 different FDIC insured accounts for instance. He also said the stock portion of your portfolio could be prudently split between 3 different funds.

But different brokerage accounts -- hmmmm, I don't recall off the top of my head any writings about that. I think it's safe to say he probably wouldn't think it was a bad idea.

Be that as it may, I have all my investment funds at a single broker. All my cash is with a single bank.

My biggest diversifier against institutional risk is gold. Probably will be some cryptocurrency in the future too.
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Re: Extremely Simple Stock Question

Post by vnatale » Sat Apr 11, 2020 2:35 pm

Smith1776 wrote:
Sat Apr 11, 2020 2:05 pm
The idea of different accounts wasn't lost on Browne. In Fail-Safe Investing, Browne recommended splitting up cash between 3 different FDIC insured accounts for instance. He also said the stock portion of your portfolio could be prudently split between 3 different funds.

But different brokerage accounts -- hmmmm, I don't recall off the top of my head any writings about that. I think it's safe to say he probably wouldn't think it was a bad idea.

Be that as it may, I have all my investment funds at a single broker. All my cash is with a single bank.

My biggest diversifier against institutional risk is gold. Probably will be some cryptocurrency in the future too.
Craig and Tex had this MANY times in their book.

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Re: Extremely Simple Stock Question

Post by Smith1776 » Sat Apr 11, 2020 2:38 pm

vnatale wrote:
Sat Apr 11, 2020 2:35 pm

Craig and Tex had this MANY times in their book.

Vinny
Ah yes, fair. I was mostly just thinking about Browne.
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Re: Extremely Simple Stock Question

Post by dualstow » Sat Apr 11, 2020 3:14 pm

In any case, I wasn't fully implement the plan in my OP. The stock market rose too quickly. O0
Not complaining. I'll do it at the next crash.

↳ Here's vinny's thread, "How many different brokerage firms are you using?"
viewtopic.php?f=1&t=10116
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Re: Extremely Simple Stock Question

Post by Mark Leavy » Sat Apr 11, 2020 4:59 pm

Smith1776 wrote:
Sat Apr 11, 2020 2:05 pm
All my cash is with a single bank.
For very practical reasons my working cash is split between four different banks/brokerages. I can't tell you how often my debit card will get jammed up by some overactive "fraud avoidance algorithm" while I'm traveling. And I usually don't have time or access to a phone to get it cleared up immediately. Thus... pull out a different card, hope that one passes the sniff test and wait until I get back to my lodging to sort it out.

Another reason to have multiple cash accounts:
I never access the account with my main cash cache via debit cards, internet purchases, ATM or any other way except to electronically transfer / top off one of my other three "working" accounts. Thus if I ever do have an account that is legitimately compromised, that account never has more than a few thousand in it. That has happened a couple of times in some dodgy places, but fortunately I was able to catch it after only a few hundred dollars.
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Re: Extremely Simple Stock Question

Post by Kbg » Sat Apr 11, 2020 7:37 pm

jhogue wrote:
Sat Apr 11, 2020 10:52 am
Kbg wrote:
Sat Apr 11, 2020 9:29 am
Yes I would feel comfortable with four ETFs. If you are serious about safety in the modern world and modern markets then perhaps something like this:

VTI
SCHQ
IAU
GBIL

This gives you low cost ETFs with four systemically large financial companies. If you like other ETFs for the four components then just switch the ETF companies. The main points being large systemically important and low cost. Don’t get distracted by things that don’t really matter.
I like the idea of simplifying with ETFs, especially when I get too old to manage my assets.

The question, that I have, however, is whether you would combine all for ETFs into a single brokerage account. Or do you need to have 4 accounts in 4 s"systemically important" firms?
Read up on this... https://www.sipc.org/for-investors/inve ... e-accounts

I'm glad I just read this...I did not realize the separate capacity nuance.

Some brokerages self-purchase additional insurance beyond the above.

So...probably worth making sure one pays attention to these things and ultimately what to do should be based on personal circumstances. Accordingly, If you have less than 500K then I think one very large, well known broker should be fine. If larger than 500K, safety would suggest having a "spread your assets around" plan.

Similar to ETFs...stick with a really large broker. Fidelity, Schwab, Vanguard, Interactive Brokers.
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Re: Extremely Simple Stock Question

Post by Kbg » Sat Apr 11, 2020 7:46 pm

One add...keep as little actual cash in your brokerage as possible. Cash can get commingled with the firm's cash and you can end up losing all non-insured cash. Stay completely away from firms whose primary business is futures.
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Re: Extremely Simple Stock Question

Post by vnatale » Sat Apr 11, 2020 7:54 pm

Kbg wrote:
Sat Apr 11, 2020 7:37 pm
jhogue wrote:
Sat Apr 11, 2020 10:52 am
Kbg wrote:
Sat Apr 11, 2020 9:29 am
Yes I would feel comfortable with four ETFs. If you are serious about safety in the modern world and modern markets then perhaps something like this:

VTI
SCHQ
IAU
GBIL

This gives you low cost ETFs with four systemically large financial companies. If you like other ETFs for the four components then just switch the ETF companies. The main points being large systemically important and low cost. Don’t get distracted by things that don’t really matter.
I like the idea of simplifying with ETFs, especially when I get too old to manage my assets.

The question, that I have, however, is whether you would combine all for ETFs into a single brokerage account. Or do you need to have 4 accounts in 4 s"systemically important" firms?
Read up on this... https://www.sipc.org/for-investors/inve ... e-accounts

I'm glad I just read this...I did not realize the separate capacity nuance.

Some brokerages self-purchase additional insurance beyond the above.

So...probably worth making sure one pays attention to these things and ultimately what to do should be based on personal circumstances. Accordingly, If you have less than 500K then I think one very large, well known broker should be fine. If larger than 500K, safety would suggest having a "spread your assets around" plan.

Similar to ETFs...stick with a really large broker. Fidelity, Schwab, Vanguard, Interactive Brokers.
That admonition holds for ETFs but NOT for mutual funds?

Vinny
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Re: Extremely Simple Stock Question

Post by Kbg » Sat Apr 11, 2020 8:12 pm

SIPC is about the brokerage...mutual funds vs. ETFs is a function of the sponsoring company and the risks are different there. Granted, a lot of the larger brokerages are also mutual fund and ETF providers. If someone is really interested in the risks when the two overlap, please feel free to do the research and report back. It would be something I would be interested in and most likely it would take a securities lawyer to educate us.
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Re: Extremely Simple Stock Question

Post by vnatale » Sat Apr 11, 2020 8:32 pm

Kbg wrote:
Sat Apr 11, 2020 8:12 pm
SIPC is about the brokerage...mutual funds vs. ETFs is a function of the sponsoring company and the risks are different there. Granted, a lot of the larger brokerages are also mutual fund and ETF providers. If someone is really interested in the risks when the two overlap, please feel free to do the research and report back. It would be something I would be interested in and most likely it would take a securities lawyer to educate us.
I'm fairly certain that this has been a fairly recent topic of discussion here. Let me see if I can find it.

It looks like it was discussed here: viewtopic.php?f=4&t=9978

From mathjak:

by mathjak107 » Sat Dec 07, 2019 4:12 am
FEW REALIZE THIS :

if you ever check your vanguard statement or fidelity they read :
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
" SIPC insurance provides protection for assets held by you in a Vanguard Brokerage account. Vanguard Brokerage Services is a division of Vanguard Marketing Corporation, which is a member of SIPC...

Vanguard mutual funds, including any Vanguard money market fund linked to your Vanguard Brokerage account, are not covered by SIPC insurance."
-------------------------------------------------------------------------------------------------------------------------------------------------
"If you buy mutual funds through a brokerage account, those funds are protected against theft by SIPC.

However, if you buy mutual funds directly from a mutual fund company, they are not protected by SIPC, because no protection is necessary : . Each mutual fund is set up as a separate entity, apart from the company that manages the fund. ""The employees at a mutual fund don't have direct access to the assets,All mutual fund assets by law must be held in a trust account at a custodian bank. "

That is a special account, not part of the bank's assets. The bank can fail, but the trust accounts are not involved in any way shape or form in that failure ...

https://www.bogleheads.org/wiki/SIPC_pr ... tual_funds


Vinny
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Re: Extremely Simple Stock Question

Post by Kbg » Sat Apr 11, 2020 8:56 pm

Thanks Vinny. I was pretty sure what you posted is how it works...just didn't know it for sure and didn't want to spout error on something this important.
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Re: Extremely Simple Stock Question

Post by vnatale » Sat Apr 11, 2020 9:10 pm

Kbg wrote:
Sat Apr 11, 2020 8:56 pm
Thanks Vinny. I was pretty sure what you posted is how it works...just didn't know it for sure and didn't want to spout error on something this important.
I knew I'd read about it but have yet embedded it in mind to give any details. Mathjak seemed to be on top of it. And, I think I later read something elsewhere that aligned with what he'd stated.

Vinny
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Re: Extremely Simple Stock Question

Post by stuper1 » Sat Apr 11, 2020 11:21 pm

Ok, so if I had a $2 million PP held at Vanguard, where 3 of the four assets were Vanguard mutual funds (stocks, bonds, cash) and the fourth asset was $500,000 in a gold ETF, does this mean that my entire $2M is safe against financial shenanigans?
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Re: Extremely Simple Stock Question

Post by Smith1776 » Sun Apr 12, 2020 12:46 am

stuper1 wrote:
Sat Apr 11, 2020 11:21 pm
Ok, so if I had a $2 million PP held at Vanguard, where 3 of the four assets were Vanguard mutual funds (stocks, bonds, cash) and the fourth asset was $500,000 in a gold ETF, does this mean that my entire $2M is safe against financial shenanigans?
Reasonably safe, but I'd hold at least a modicum of gold in physical form.
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