Monday, May 22, 2017

Account changes and additional buys

I am closing my Roth IRA and converting all the funds into my taxable account.
My contribution base is around $13,000 and my capital gains is $1500 so I will pay a bit of tax on the $1500. The $13000 I will withdraw without any problem because the Roth IRA allows you to withdraw your contributions.

The Roth IRA is a great way to accumulate wealth without tax penalty given one is old enough to enjoy the money. However a big problem with the Roth IRA is the limit on how much you can contribute each year. My contribution limit to the Roth IRA is $5500 a year at the moment. This is a very small amount compared to the contributions I make to my 401k and my taxable account. There is a management overhead for me to keep track of all the accounts and statement records and tax documents used for filing taxes. Another big problem is that my income is higher than the Roth IRA limit, so I have to do the backdoor Roth which is even a bigger hassle.

Adding $5500 in a tax sheltered account that I have to jumps hoops to contribute to, and which I cannot use until I have white hair just is not worth it to me. I plan to retire in my 30s or 40s and I want to use my money how I want without any withdrawal rules. For others it may be worth it if $5500 a year is around the scale one is contributing to one's investments. But since I am contributing many multiples more than $5500 a year, I will pass.

My Roth IRA held the following this morning. As of now it's all cashed out:

Ticker Market Value Shares Share price
O $8,786.36 162.11 $54.20
VZ $2,044.81 45.02 $45.42
MO $3,462.76 48.84 $70.90

I sold all the shares so that I can liquidate and transfer all the cash into my taxable account. Since "O" is not a tax friendly investment since its dividends are taxed as ordinary income due to its REIT status, I bought around $9500 worth of O in my 401k, increasing my total position in O by around $750. My 401k already held O so the position got a lot larger in that account. 

To fund this large "O" purchase in my 401k I had to sell my large stake of around $8800 in Home Depot (HD) in my 401k and buy that Home Depot position back in my taxable account .... I know complicated. I ended up adding $9350 of Home Depot in my taxable account so I increased my total position in HD by around $550.

I also bought $3800 of MO in my taxable account, so I increased my total position in MO by around $400.

Finally I sold VZ and bought AT&T in my taxable account. I bought roughly the same dollar amount of AT&T as I sold Verizon. I am more favored towards AT&T's business model than Verizon and am not a fan of Verizon's acquisition spree and debt.

At the moment I still have around $30k in investable cash. I keep $11k in a savings account for a rainy day or for my future mortgage deposit (that is if I ever decide to settle down). A lot of money is swashing around between accounts as I close one account to open another. I closed my Capital One Investing taxable account in favor of my Merrill Edge which combined my Bank of America account with my brokerage account. Merrill gives me 100 free trades a month since my account size is large enough to qualify for the offer, so I took the leap to basically free trades ... For a dividend investor 100 trades a month is way more than enough.    And soon , I will be closing my Fidelity Roth IRA account and moving all the funds to the Merrill taxable account where I will be able to enjoy using my cash in commission free trades. Everything then will all be combined into one account which will make managing and paperwork much simpler.

If my account size becomes super large to the point that it may be risky having all of my money invested under one account, I may consider opening several taxable accounts just in case one of the brokerage firms go under. Merrill Edge which is Bank of America is quite reputable, so I am quite happy with the broker and the security features and customer service so far.


  1. Hi YD, i remember you sold NKE for tax loss harvesting. Do you plan to buy it again?

  2. Lot of changes,it seems VZ/T are now trading at more favorable values