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Old 25-03-2019, 01:40 PM   #1114
BBCWatcher
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Join Date: Jun 2010
Posts: 10,941
In the past I have been dabbling in stocks and now have a portfolio of some 40-45 counters - mainly in US and Singapore with a total value about 300K.
That's complicated!

As I am now in early 50s I am thinking of selling it all and replacing it with the ETFs recommended here - MBH, ES3, IWDA and EIMI. I am thinking of selling my stock holdings over a period of 6 to 9 months and replacing them with the ETFs above (over the same time period) in the ratio 15-20-55-10 respectively. The objective is to make the portfolio 'safer' and hopefully generate predictable returns.

So the question for the experts here is:
  • if this a reasonable strategy? If not what would you suggest?
The strategy looks reasonable to me, assuming you expect to retire in Singapore and assuming you've got some CPF savings since an 85-15 stocks-bonds allocation is a bit aggressive otherwise. Also, if you're aiming for a traditional/classic age 65 retirement, then you'll likely want to start adjusting your stocks-bonds mix no later than age 58 (T minus 7 years before retirement). We'll now turn to mechanics.

  • what is the best way to liquidate a stock portfolio (all at once or over 6/9/12 months)?
For the U.S. listed/traded stocks, I would focus on their ex-dividend dates as possible sales opportunities. That's because you're currently paying a 30% dividend withholding tax on those stocks, and you can drive down the ongoing tax cost with a shift to the Irish domiciled ETFs. Let's suppose for example you're holding shares in Microsoft (MSFT). Microsoft went ex-dividend on February 20, 2019. That is, everybody who purchased Microsoft shares before February 20, 2019 -- who were shareholders of record as of market close on February 19, 2019 -- qualified to receive the quarterly dividend. Presumably the next ex-dividend date will be on May 20, 2019. If you sell your Microsoft shares on or before May 17, 2019 (the last trading day before the next expected ex-dividend date), then you should avoid the next quarterly dividend (and its dividend withholding tax). Other things being equal, the selling price your shares fetch should reflect the fact that the buyer will get the dividend instead of you, but the buyer will typically pay a lower dividend tax than you will (not usually as high as 30%). So, if you're trying to exit, and assuming you're otherwise unable to predict the future (a safe assumption), that seems like a good time to exit.

Another minor factor is that you'll have to pay minimum monthly commissions at Interactive Brokers starting from the 4th month after account opening if your total account value hasn't reached US$100K yet.

These are minor factors, though. Since you're going from stocks to stocks, and since your holdings before and after this shift are going to be broadly similar (just much more diversified and with a lower cost structure), I think it's fine to make this shift pretty quickly.
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