I still remember when I purchased my first few shares of individual stock in my “fun money” account. My rule to myself was put most of my money in index funds and throw some money at tech companies because why not. I bought some apple, some amazon, some Netflix, and a few other companies.
Over the years, I bought more shares of tech companies. It was fun watching them increase in value. I sold off the losers. They kept growing. I kept throwing extra money at tech companies because I had maxed out my IRA or 401k and index funds outside of my retirement accounts seemed just – boring. Dumb, I know.
I just took a look at my large cap stocks (not counting the $ in 529) across both taxable and retirement accounts (in both my husband and my accounts) and it’s about 68% tech, 22% index funds and 10% non tech individuals stocks. It got extra overweighted in tech when I decided to hold on to my company ESPP — which was a pretty good move in that it has multiple in value quite a bit but bad in that it has me way overweighted in tech. I plan to sell off a bit of it when I leave the company on a bad year (since a chunk of it will get taxed as income and my cap gains tax rate can be very high.) Nonetheless, I’m wayyyyy overweighted in tech. It’s relatively concerning. $549.4k concerning, to be exact. Plus any of the $180.4k in large cap index funds that is in tech.
Overall, these tech stocks are 33.7% of our portfolio. It’s too much. But I don’t want to sell off the tech stocks I have (outside of the ESPP which I’ll sell off once I’ve left the company and earn less), I want to invest elsewhere with future savings to balance everything out. But that may be a bad idea should tech crash and burn this year, which is might. I’ve already lost a lot (can’t keep up with it) by holding my RSU vs selling off immediately on vest.
My new rule is that I won’t buy any more tech stocks. If I want to buy any tech stocks I need to sell some of my existing tech stocks and buy new tech stocks with the proceeds. This will be hard because I always want to buy new tech stocks that I think will do well. But I need to stop that because at this point it’s gambling not investing. And it’s not just my money, it’s my family’s money (all of my husband’s savings are in index funds but now we’re managing the family portfolio jointly.)
At least my emerging markets, small cap and international funds are all in index funds. It’s just my large cap portfolio that’s a mess. And that’s not good since large cap is supposed to be the most stable part of my portfolio. Yikes.
What should I do? Sell off a chunk of my tech gains and take the tax hit or hold and focus on building out the portfolio around these stocks so their weight goes down?