06-07-2014, 09:55 AM
Like myself, the majority of people on this site probably invest in individual stocks. If you are able to actively manage your portfolio, there are several reasons for this mode of investment, including the ability to buy stocks at below fair value, minimization of fees, and the ability to monitor the fundamentals of individual companies. At some point in retirement, most of us will either not be able to actively manage our portfolios or will die and leave our investments to spouses who can't or don't want to actively manage a portfolio.
I can see three investment options for this case. First, the individual stocks already owned can be kept with no active management; however, this works best if only dividends are being withdrawn, which requires a large portfolio. Selling stocks will require some type of judgement to select which stocks to sell. Second, sell the company stocks and buy ETFs or mutual funds, which will provide greater diversification and ability to continue following the dividend growth approach with greater fees and less performance. Third, sell the company stocks and buy an immediate annuity which will provide an income till both partners are dead with the drawback of a fixed income level and inability to give money to heirs.
I am leaning to trimming the stock portfolio back to a core of the absolute best performers and buying an ETF; however, I which there were better choices in dividend growth ETFs.
Another question is when to make the transition. At this point, I will probably leave instructions to my wife on what to do if I die suddenly (she has been asking), but further thought will be required for other cases.
I can see three investment options for this case. First, the individual stocks already owned can be kept with no active management; however, this works best if only dividends are being withdrawn, which requires a large portfolio. Selling stocks will require some type of judgement to select which stocks to sell. Second, sell the company stocks and buy ETFs or mutual funds, which will provide greater diversification and ability to continue following the dividend growth approach with greater fees and less performance. Third, sell the company stocks and buy an immediate annuity which will provide an income till both partners are dead with the drawback of a fixed income level and inability to give money to heirs.
I am leaning to trimming the stock portfolio back to a core of the absolute best performers and buying an ETF; however, I which there were better choices in dividend growth ETFs.
Another question is when to make the transition. At this point, I will probably leave instructions to my wife on what to do if I die suddenly (she has been asking), but further thought will be required for other cases.