No BS Finance

I’m not the only person looking to put my portfolio into funds and out of individual stocks. Why am I doing it?

Let’s see…I purchased several companies in 2000 and have held since then. Companies I thought had good long-term prospects. Here’s how they have performed…

Note: my employer’s stock has been purchased via dollar-cost averaging since June 1997.

No matter how you stack it against whichever indices, that just isn’t good. The bulk of my portfolio is in the Spartan US Equity Index, which has returned 10.09% total in various accounts, some dollar-cost averaged and others with single purchases.

It’s a no-brainer. It’s time for the stocks to be sold and a new allocation into index funds created. Some will stay in US equity, some will be bonds, some will be international stocks, etc.

But, it’s not worth the hassle and time to try outperforming the indices. Professional fund manager’s can’t do it regularly - why would I think I can? Plus, it should be fairly obvious I don’t evaluate the stocks in my portfolio often enough. These dogs should have been gone a long time ago.

Discipline is the key to maintaining long-term stability with personal finances. So, it should come as no surprise, that mega-lottery winners don’t all ride off into the sunset happy, content, and financially secure.

If someone has trouble managing money normally, what changes with a sudden influx of millions? Nothing - except the mistakes seem to be magnified. But, who cares, right? There’s no way we could spend all that money…

I remember a few years ago when the NBA (professional basketball) players were on strike. One of the union leaders said, “Sure we make a lot of money, but we have a lot of expenses, too.” Expenses seem to rise up with income for a lot of people, especially those who obtain their money quickly, like in a lottery.

I no longer feel quite so disgusted about my obscenely large tax refund. How big is it? About 8% of my annual income. Downright huge and a massive interest-free loan to the government.

However, as I look at it closer, there wasn’t a whole lot I could do about it. My actual tax was 60% of what was withheld.  57% of the withheld amount was from one(!) paycheck - my relocation reimbursement check. Taking that out, and keeping my withholding where I had it would have pretty much pegged me on the right amount.

I did decrease my amount withheld from each paycheck, little did I know I should have tried cutting it out altogether.

I’ll keep that in mind the next time I move for work.

The Monday carnivals are out. No BS Finance participated in two this week, the Carnival of Debt Reduction and the Carnival of Personal Finance.

As usual, it’s going to take me a couple of days to read everything. The “personal finance” webspace sure has exploded in the past few months. The more the merrier, I say. I never want to get to the point where I think I know everything.

Whew - taxes are essentially finished for the year. We completed our Federal and one state tonight with TurboTax. We still have a state to do by hand (I’m not paying $25 for what should be a simple return), as well as two local returns from that state.

TurboTax was once again extremely simple to use. Here is the time breakdown:

• Install TurboTax - 7 minutes
• Update and Register TurboTax - 6 minutes
• Actually do the taxes - 105 minutes

We actually should have spent less time - we forgot to pull our records from the house sale and purchase this year and had a hard time finding them. That added 10-15 minutes.

We did end up with a refund - a disgustingly large one at that. The relocation did throw things way out of whack. I’ll have to do a much better job estimating 2006 taxes to avoid that.