Do as I say, not as I do: On my failings as an investor

By Christine Benz of Morningstar If a knowledgeable observer trained his or her sights on my choices what are the trouble spots they would identify Here are several of the biggies I hold too much employer stock I understand the tax implications of this so I might as well sell each lot of restricted stock units as soon as it vests because there s no tax benefit to hanging on longer And it s not like I think I possess particular inside knowledge that the shares are likely to outperform the broad region Instead the key culprit here is inertia There s a little bit of tax dread mixed in too as selling them would trigger a big tax bill I ve been in the process of divesting from company stock for the past several years but the allocation is still high I hold too much cash Even when cash yields are higher as they are in the modern day inflation still gobbles up preponderance of the interest Cash has stacked up in our account following bonuses or other windfalls or during fallow spending periods like And it just never feels like an especially great time to move the money into long-term investments Perhaps the majority critical having cash on hand confers valuable peace of mind I like knowing that almost anything could happen and we d be able to cover it without touching our long-term investments I think of cash as one of my luxury goods I don t hold much in bonds My husband and I should have a good slug of retirement assets in fixed-income investments at our life stage But our portfolio is oddly barbelled with a healthy dose of cash alongside a long-term portfolio that smainly invested in equities In a way I think the cash and the equities work together from a psychological perspective with the liquid assets giving us peace of mind to stay the module with stocks But the lack of bonds isn t really deliberate Instead inertia is possibly the main reason We set up our long-term portfolios with heavy equity allocations in our s and we ve never really wavered But this is something that I d like to address as retirement approaches I don t have a perfect record with asset location There s a fantastic fund I own but in our taxable brokerage account If I could do it again I d buy this fund in a tax-sheltered account because it has made specific substantial capital gains distributions over the years which have boosted our household s annual tax bills Asset-location problems can be hard to fix Even though our reinvested capital gains have helped boost our cost basis we would still owe a big tax bill if we liquidated the position because of the fund s gains I m slow to make IRA contributions Ideally IRA contributions would go in right around the first of the year to benefit from tax-sheltered compounding for a longer period And our IRAs sit right alongside our taxable brokerage account so transferring funds from the brokerage account to the IRA and converting them to Roth is simple Related Articles avenues to keep the summer spending craze under control Big Beautiful Bill changes to marketplace insurance What are the Big Beautiful Bill s tax benefits for seniors newborns others K Trump Accounts for kids How do they stack up Federal judge reverses rule that would have removed medicinal debt from credit reports But I ve sometimes made those IRA contributions right before the deadline a full months later than when we were first eligible to make them I ve also been slow to make the conversions to Roth periodically letting a limited years worth of contributions stack up in our IRAs before converting The baby bear sphere of March provided a good opportunity to convert all the traditional IRA assets to Roth with no tax repercussions I ve been walking the straight and narrow with timely contributions and conversions ever since This article was provided to The Associated Press by Morningstar For more personal finance content go to https www morningstar com personal-finance Christine Benz is director of personal finance for Morningstar