[manaboutown]

Currently I am rereading a book published in 2013 written by Donna Skeels Cygan CFP MBA, a financial advisor based in Albuquerque, NM where I once lived. After her book was published I read it and consequently interviewed and considered hiring her as a financial advisor but decided to stick with DIY.

Rereading her book, "The Joy of Financial Security" prompted me to seriously review my asset allocation, which I never gave much thought to when I was younger but at age 81 bears scrutiny. Anyway, I find it a literal gold mine of what to consider.

Donna addresses the psychological side of investing as well as the nuts and bolts which has helped me pass my "sleep at night" test.

If anyone is currently wanting to take a hard look at the asset allocation in their portfolio I recommend her helpful book.

[retiredguy123]

I would like to reduce my percentage of stocks, which are at 40 percent, but every time I calculate the capital gains taxes, I say never mind.

[Caymus]

Originally Posted by retiredguy123

I would like to reduce my percentage of stocks, which are at 40 percent, but every time I calculate the capital gains taxes, I say never mind.

That is always one on the best "problems" to have.

Do they pay dividends?

[retiredguy123]

Originally Posted by Caymus

That is always one on the best "problems" to have.

Do they pay dividends?

All of my stock investments are in indexed mutual funds. They do pay dividends and capital gains distributions, which are taxable income. Also, I take the income as cash and do not reinvest them back into the funds. That is one way to reduce your stock market exposure.

[manaboutown]

Originally Posted by retiredguy123

All of my stock investments are in indexed mutual funds. They do pay dividends and capital gains distributions, which are taxable income. Also, I take the income as cash and do not reinvest them back into the funds. That is one way to reduce your stock market exposure.

That is pretty much what I am doing in addition to putting most of my continuing savings into cash rather than stocks. My securities portfolio is currently 65% stocks and 35% cash. I want to move it to 60-40 and eventually 50-50 if I live long enough.

[Smalley]

Originally Posted by retiredguy123

All of my stock investments are in indexed mutual funds. They do pay dividends and capital gains distributions, which are taxable income. Also, I take the income as cash and do not reinvest them back into the funds. That is one way to reduce your stock market exposure.

In my opinion, very good advice to stop re-investing dividends. We stopped not too long ago but should have stopped sooner. A good way to be tax efficient.

[thevillager1988]

Posts like this are one of the reasons I love our TOTV family!

[MidWestIA]

Fidelity had webinars from Asbury research he tracked some things like sector etfs and gave be active or cut back in the marke advise. I started tracking that and stocks-etfs I was interested in or hot everyday so now I know what's going on that I care about better than the tv & internet talking heads. I have some kinda bond but am all in otherwise BUT after 2021 2022 I learned to have stop loss orders in place at all times.

Just make multiple portfolios on morningstar with different buy dates, download and paste to xls sheets. Use yahoo finance chart to see in addition to that

[FromDC]

Originally Posted by Smalley

In my opinion, very good advice to stop re-investing dividends. We stopped not too long ago but should have stopped sooner. A good way to be tax efficient.

I am a buy-and- hold investor while reinvesting dividends. Could you explain why it is more tax efficient to stop reinvesting dividends? Thanks!

[retiredguy123]

Originally Posted by FromDC

I am a buy-and- hold investor while reinvesting dividends. Could you explain why it is more tax efficient to stop reinvesting dividends? Thanks!

Dividends and capital gains distributions are taxable income regardless of whether or not you reinvest them. I direct the mutual fund to transfer all dividends and distributions into my cash reserve money market account. It doesn't reduce taxes, but it does ensure that you will have money available to pay the income tax. It reduces the stock portion of your portfolio over time, but you can always buy additional shares on your schedule. Sometimes, you can get a large capital gains distribution that you didn't expect. Also, you always have the same number of shares in the fund, and your cost basis is always the same, unless you manually buy or sell shares. That is helpful if you have one investment company tracking the value of funds from another company. To me, there is no advantage to automatically reinvesting unless the fund is giving you some type of discount. Buy shares on your schedule, not on the fund's schedule. It only takes about a minute to change your mutual fund distribution options from reinvest to cash for both dividends and capital gain distributions.

[rsmurano]

Not all dividends and gains are taxed! In your non-taxable accounts, any dividend or capital gain (short or long term) are not taxed, these monies are only taxed when you take an RMD or decide to sell after 59.5 years old. Any dividends or gains in your Taxable accounts are taxed.
I don’t touch my non-taxable accounts so all gains and dividends are reinvested. Since we can live off our taxable accounts and SS, I don’t reinvest any gains and dividends.
As for investment allocation, I never bought bonds, they don’t make you any $$$ and I would rather make $$$ when the market is going good. When I’m fully invested, it’s 95% Indexed funds and apple. Now with all of the turmoil in the country, I sold all of my non-taxable holding when they were at their highest 1.5 years ago. I have most of these $$$$ invested in money market funds getting 4.85%. I have purchased decent size allocations in my non-taxable accounts of technology indexed funds and energy this year to take advantage of some of this tech craze over AI.

[PersonOfInterest]

Originally Posted by manaboutown

Currently I am rereading a book published in 2013 written by Donna Skeels Cygan CFP MBA, a financial advisor based in Albuquerque, NM where I once lived. After her book was published I read it and consequently interviewed and considered hiring her as a financial advisor but decided to stick with DIY.

Rereading her book, "The Joy of Financial Security" prompted me to seriously review my asset allocation, which I never gave much thought to when I was younger but at age 81 bears scrutiny. Anyway, I find it a literal gold mine of what to consider.

Donna addresses the psychological side of investing as well as the nuts and bolts which has helped me pass my "sleep at night" test.

If anyone is currently wanting to take a hard look at the asset allocation in their portfolio I recommend her helpful book.

I don't think Asset Allocation applies to my small amount of retirement savings.

[FromDC]

This is what I have summarized from Posts #10 and 11. I appreciate the responses.

In my IRA (non-taxable) account, I should reinvest the dividends/gains since I am not taxed until I take an RMD.

In my mutual funds (that are taxable accounts), I should move the dividends/gains to a mutual fund cash account and initiate any 'buys' when I want to.

[Stu from NYC]

Originally Posted by FromDC

This is what I have summarized from Posts #10 and 11. I appreciate the responses.

In my IRA (non-taxable) account, I should reinvest the dividends/gains since I am not taxed until I take an RMD.

In my mutual funds (that are taxable accounts), I should move the dividends/gains to a mutual fund cash account and initiate any 'buys' when I want to.

I have a different opinion on dividend distribution in taxable accounts. As you get them and reinvest you are also doing dollar averaging for the dividends. Better way to increase investments more efficiently.

[JeepsterGlenn]

If your investments are in a 401k you only pay taxes when you withdraw funds so it doesn’t matter on dividend reinvestment unless you withdraw…