Our Portfolio Strategy
A plan to diversify, protect, and grow — March 2026
$6.94M
Total portfolio
64% → 45%
Tech concentration
$200-250K
incl. ~$80K dividends
Annual draw target
The Big Picture
The Gist
Nearly two-thirds of our money is in tech stocks — mostly Apple, which we can't sell without a huge tax hit. So we're restructuring the accounts we can change (the SEP IRA) to build a safety net around those locked positions. Think of it as building a diverse garden around a very large tree.
Right now, about 64% of our total investments are in technology companies. That worked beautifully during the tech boom, but it also means a serious tech downturn could hit almost everything we own at the same time. The strategy here is simple: we keep the tech stocks we can't sell (because the tax bill would be enormous), and we rebuild everything else to be as different from tech as possible.
What we can and can't change
- Taxable accounts (~$3.03M) — can't touch. Our Apple stock alone has over $1.6M in unrealized gains. Selling would trigger a massive capital gains tax. These stay put.
- SEP IRA ($3.68M) — our main lever. Trades inside this account are tax-free. This is where we do all the restructuring.
- Contributory IRA ($177K) and Roth IRA ($47K) — small adjustments.
What we're trying to achieve
- Reduce the damage if tech stocks drop 30-50% (which has happened before — the Nasdaq fell 78% from 2000 to 2002)
- Generate ~$80K/year in dividends and interest to partially fund our living expenses
- Build a 3-year cash/bond cushion so we never have to sell stocks during a downturn
- Fund two college educations without disrupting the overall plan
- Save potentially $800K-1.3M in lifetime taxes through Roth conversions
Why not just stay concentrated?
If tech keeps booming, our current portfolio would grow faster. But we're entering the phase of life where we're spending from the portfolio, not adding to it. A 40% tech crash during withdrawals creates a compounding problem that can take decades to recover from — or never fully recovers. Diversification costs us some upside but dramatically reduces the risk of running short.
The New SEP IRA Portfolio
The Gist
We're selling 20 positions in the SEP (mostly tech stocks that duplicate what we already own in taxable accounts) and rebuilding into 11 carefully chosen positions — spanning bonds, international markets, healthcare, industrials, real estate, gold, and a small amount of retained tech (Google). No tax consequences since it's all inside the IRA.
Broad Market
International
Bonds
Berkshire
Google
Healthcare
Gold
Real Estate
Industrials
Alternatives
| Position | What It Is | % | Amount |
|---|---|---|---|
| RSPE | Equal-weight S&P 500 (ESG screened) — gives us all 500 companies equally, not dominated by tech giants | 20% | $736,793 |
| VXUS | Total international stock market — Europe, Japan, emerging markets. We have almost zero non-US exposure right now | 15% | $552,595 |
| BND | Total bond market — generates ~4.5% interest, acts as a safety buffer during stock market drops | 14% | $515,755 |
| BRK.B | Berkshire Hathaway — Warren Buffett's conglomerate. Insurance, railroads, energy, consumer brands. Like a curated mutual fund with no fees | 12% | $441,676 |
| GOOGL | Google/Alphabet — kept because it's the best-diversified big tech name (search, cloud, YouTube). Trimmed from 21% to 8% | 8% | $294,717 |
| XLV | Healthcare sector — Johnson & Johnson, UnitedHealth, Eli Lilly, Pfizer. Defensive, aging-population tailwind | 6% | $220,838 |
| IAU | Gold — inflation hedge, crisis hedge, genuinely moves independently from stocks and bonds | 5% | $184,198 |
| VNQ | Real estate ETF — commercial, residential, and specialty REITs. ~3.5% dividend yield | 5% | $184,198 |
| XLI | Industrials — Caterpillar, Honeywell, Deere, Raytheon. Manufacturing, infrastructure, defense | 5% | $184,198 |
| DBMF | Managed futures — a strategy that can profit when markets fall. Our "insurance policy" position | 4% | $147,359 |
| Cash reserve — for near-term withdrawals | 6% | $221,636 | |
| Total | 100% | $3,683,963 |
Why these specific picks?
Every position fills a gap. Our taxable accounts are almost entirely US tech stocks. So the SEP goes the opposite direction: international markets, bonds, healthcare, industrials, gold, real estate. The only tech we keep is Google (trimmed from 21% to 8%), because it's the most diversified big tech company — revenue from advertising, cloud computing, and YouTube rather than just hardware or chips.
Other Accounts
The Gist
The Contributory IRA and Roth IRA are small — together they're about 3% of the portfolio. Simple changes: balanced growth in the Contributory, high-growth in the Roth (because Roth grows tax-free forever). The taxable accounts stay exactly as they are.
Contributory IRA — $177,208
| RSPE | Equal-weight S&P | 50% |
| BND | Bonds | 35% |
| VXUS | International | 15% |
Balanced growth. Sells: SGOV, NVDA.
Roth IRA — $47,028
| AVGO | Broadcom (AI chips) | 35% |
| RSPE | Equal-weight S&P | 35% |
| IAU | Gold | 30% |
Higher growth. Roth grows tax-free forever — no taxes on gains, ever.
Taxable Accounts (~$3.03M) — We're Not Touching These
AAPL ($1.96M), NVDA ($324K), TSM ($343K), MSFT ($126K), and others. Selling would trigger hundreds of thousands in capital gains taxes. We accept the tech concentration here and build our safety net everywhere else. The only action: earmark $125K of SGOV (short-term Treasury) in Account 1 for Jamie's first year of college.
The Whole Picture After Changes
The Gist
After rebalancing, tech drops from 64% to 45% of our total portfolio. We gain meaningful exposure to bonds (8.3%), international (8.3%), industrials (2.7%), healthcare (3.9%), and several other asset classes that were nearly absent before. Plus, we own real estate directly (our apartments and houses), which adds another layer of diversification not shown in these numbers.
| What We Own | % of Total | Before |
|---|---|---|
| Big Tech (locked in taxable) | 40.5% | 64% |
| Google (kept in SEP) | 4.2% | — |
| Broad US Market (RSPE) | 10.9% | 0% |
| Berkshire Hathaway | 6.4% | 0% |
| Bonds | 8.3% | 0% |
| International Stocks | 8.3% | 2.3% |
| Healthcare | 3.9% | 1.7% |
| Real Estate | 2.7% | 0.7% |
| Industrials | 2.7% | 0% |
| Gold | 2.9% | 1.6% |
| Managed Futures | 2.1% | 0.8% |
| Cash | 5.5% | 15% |
Plus: our property holdings
These numbers only reflect the investment portfolio. We also own an apartment in the city, a house in the Hudson Valley, and have interests in Amsterdam properties. That's significant additional diversification — real estate that moves independently from the stock market. A financial advisor would factor this into the total picture.
Living Expenses & Income
The Gist
We plan to draw $200-250K per year. The portfolio generates about $80K/year in dividends and interest automatically — covering roughly a third of our expenses. During stock market downturns, we draw only from bonds and cash (we have 3 years' worth) so we never have to sell stocks at a loss.
Where the income comes from
| Source | Per Year |
|---|---|
| Bond interest (BND) | ~$23,200 |
| International dividends (VXUS) | ~$16,200 |
| Broad market dividends (RSPE) | ~$11,800 |
| Apple dividends (taxable) | ~$10,450 |
| Real estate dividends (VNQ) | ~$6,440 |
| Healthcare dividends (XLV) | ~$3,315 |
| Industrial dividends (XLI) | ~$2,580 |
| Other (AMGN, GOOGL, CSCO) | ~$4,500 |
| Total automatic income | ~$78-83K |
The remaining $120-170K comes from selling positions as needed. In good years, we sell a bit more. In bad years, we sell less and lean on the automatic income plus cash reserves.
The Down-Market Rule
If the stock market drops more than 15%, we draw ONLY from bonds and cash. No selling stocks into a downturn. Our bonds ($516K) + cash ($222K) = $738K — that's about three years of living expenses. This buys time for stocks to recover without locking in losses.
Roth Conversions — The Big Tax Play
This Is Important
This is potentially the single most valuable financial move we can make. By gradually moving money from the SEP IRA into a Roth IRA over the next 10-15 years, we could save $800K to $1.3 million in lifetime taxes. It requires a CPA to execute properly, but the math is compelling.
The basic idea
The SEP IRA is a ticking tax bomb. When Joe turns 73, the IRS requires him to withdraw a percentage each year (called Required Minimum Distributions — RMDs). Those withdrawals get taxed as regular income, potentially at 32-35%.
A Roth IRA, on the other hand, grows completely tax-free. No taxes on growth. No taxes on withdrawals. No required withdrawals — ever. The catch: you pay taxes when you convert from SEP to Roth.
The strategy: convert during lower-income years (when Joe steps back from client work) and pay ~18-22% tax on the conversions, instead of waiting and paying 32-35% on forced withdrawals later.
The 10-year plan
2026 — First conversion
Convert ~$150K. Pay ~$33K in taxes. CPA engagement required first.
2027-2029 — Golden window
If Joe shifts to Recoil Studios and income drops, convert $175K/year. Lower income = lower tax bracket = cheaper conversions.
2030-2031 — Steady conversions
$150K/year. By 2031, Roth balance reaches ~$1.2M.
2032-2035 — Julian's college years
Reduce to $50-100K/year. Still converting, just smaller amounts while paying tuition.
2036+ — Resume full speed
$150-200K/year. Post-college, back to aggressive conversions.
The tax savings, side by side
Without Conversions
- SEP at age 73: ~$5.5-6.5M
- Required withdrawal: ~$210-247K/year
- Tax rate: 32-35%
- Annual tax on RMDs: $67-86K
- 20-year total tax: ~$1.7-2.2M
With Conversions
- SEP at age 73: ~$1.5-2.0M (rest is in Roth)
- Required withdrawal: ~$57-76K/year
- Tax rate: 22-24%
- Conversion tax paid: ~$350-420K
- Total lifetime tax: ~$690-900K
Net savings: $800K - $1.3M over our lifetimes
Even in the most conservative estimate, this saves over $400K. The Roth money also passes to Jamie and Julian tax-free — it's a generational benefit.
College Funding
The Gist
Jamie starts college around 2027, Julian around 2032. They're sequential — never overlapping — which makes this much more manageable. We budget ~$350K per child, or about $700K total over 10 years. That's roughly 10% of our current portfolio.
Jamie — Fall 2027
- Year 1: $125K already earmarked in SGOV (Treasury bills) in taxable account
- Years 2-4: Draw from SEP bonds and cash
- Budget: ~$75-90K/year
- Too late for a 529 plan — too short a horizon
Julian — Fall 2032
- Action now: Open NY 529 Direct Plan (Vanguard)
- Contribute: $10,000/year (NY state tax deduction)
- 6 years of growth = ~$75-85K by enrollment
- Remainder from portfolio draws
Good news: Because the tuitions are sequential (not overlapping), we're only ever paying for one child's college at a time. That keeps the annual draw at $280-340K during college years — elevated but well within the portfolio's safe withdrawal range.
What Could Happen — Scenarios
The Gist
We modeled seven different scenarios from "tech keeps booming" to "2000-style crash." In the most likely case, the portfolio grows from $6.94M to ~$12.8M by age 72, even after $225K/year withdrawals and college costs. The key insight: rebalancing costs us some upside in the best case, but protects us by $1-2.4M in the worst cases.
Our plan — what we expect
All scenarios include $225K/year living expenses + college costs, both growing with inflation.
Most Likely
$12.8M
At age 72. Our rebalanced portfolio growing at 8.7%/year.
If Growth Is Slower
$7.4M
At age 72. Even at only 6.5% return, we're still comfortable.
Either way, $7-13M at 72 is more than enough. We don't need to maximize the number — we need the number to be reliably good enough.
Why not just leave everything in tech?
If tech keeps booming for 20 straight years, the concentrated portfolio would reach ~$21M by age 72 vs. our plan's $12.8M. That gap looks painful. But those are age 72 numbers — they hide what happens along the way.
Here's what a tech crash actually looks like when you're pulling $225K+ per year to live on and paying for Jamie's college at the same time:
| Age | What Happens | If We Don't Rebalance | Our Plan |
|---|---|---|---|
| 52 | Starting point | $6.94M | $6.94M |
| 53 | Tech crashes -40%. Jamie starts college. | $4.7M | $5.3M |
| 54 | Tech flat (bottomed). Still paying tuition. | $4.2M | $4.8M |
| 55 | Slow recovery begins. | $4.3M | $4.9M |
| 56 | Recovering. | $4.5M | $5.2M |
This is where the real danger lives.
At age 54, you're sitting at $4.2M and need $280-340K that year (living expenses + tuition). That's a 7-8% withdrawal rate from a crashing portfolio. You can't wait for recovery — the bills are due now. Every dollar you pull out at the bottom is a dollar that never compounds back. This is the scenario where people panic, sell everything at the worst possible moment, and lock in catastrophic losses.
And that's a moderate crash. Apple dropped 57% in 2008. NVIDIA dropped 83%. The Nasdaq fell 78% from 2000 to 2002 and didn't recover for 15 years. In a crash that severe, the unrebalanced portfolio hits $3-3.5M at age 54 — with $300K/year going out the door. That math simply doesn't work.
The argument for rebalancing, plainly stated
$12.8M is plenty. We don't need $21M. What we need is a portfolio that can reliably generate $200-250K/year for 30 years, fund two college educations, and not blow up if tech has a bad stretch. Our rebalanced plan does that with a 94% success rate. The concentrated portfolio does it too — if tech keeps winning. But if tech stumbles for even 3-5 years while we're withdrawing, the concentrated portfolio enters a danger zone that the rebalanced one avoids entirely. We're trading upside we don't need for downside protection we might desperately need.
How safe is the $200-250K draw?
| Annual Draw | Chance Portfolio Lasts 30+ Years | Verdict |
|---|---|---|
| $200K/year | 97% | Very safe |
| $225K/year | 94% | Safe |
| $250K/year | 90% | Manageable |
| $300K/year | 80% | Needs monitoring |
| $350K/year | 66% | Only in exceptional years |
The $200-250K range keeps us in the 90-97% safety zone. During college years, the effective draw temporarily rises to ~$305-340K, but that's only for 8 of the next 30 years, and it's one child at a time.
The To-Do List
The Gist
Three weeks to execute the main rebalancing. Week 1: sell the positions we're exiting. Week 2: buy the new positions. Week 3: adjust the small IRAs. Then ongoing items through the year.
Week 1 — Sell in SEP IRA
Sell 20 positions (AAPL, AMZN, AMD, AVGO, NVDA, QQQ, NFLX, SGOV, and 12 others). Trim Google from $773K to $295K. This frees up ~$3.14M in cash inside the SEP. No tax consequences.
Week 2 — Buy new positions
Buy RSPE ($737K), VXUS ($553K), BND ($516K), BRK.B ($442K), XLV ($221K), XLI ($184K). Add to existing IAU, VNQ, and DBMF positions. Use limit orders for RSPE (lower volume ETF).
Week 3 — Small IRAs
Contributory: sell SGOV and NVDA, buy RSPE/BND/VXUS. Roth: sell QQQ and EFAV, buy AVGO/RSPE/IAU.
April–May 2026
Open NY 529 for Julian ($10K first contribution). Earmark SGOV for Jamie. Engage a CPA for Roth conversion modeling.
Q4 2026
First Roth conversion — amount depends on full-year income. CPA determines exact figure.
Ongoing — Quarterly
Check allocations. Rebalance if anything drifts more than 3% from target. Annual full review.
Questions for Our Financial Advisor
The Gist
We built this plan using AI consultation tools. Before executing, we want a licensed fiduciary advisor to review it, challenge our assumptions, and flag anything we might be missing. Here are the 10 specific questions we want answered.
- Given the locked taxable accounts (~$3M in tech), does the SEP portfolio make sense as a counterweight? Is 8% Google too much or too little?
- Is Berkshire Hathaway at 12% a good anchor, or would you recommend something different?
- Is 14% bonds + 6% cash the right mix for a 52-year-old targeting $200-250K/year withdrawals?
- Does the Roth conversion math hold? Any NY state tax surprises we should know about?
- Is RSPE (Invesco ESG Equal Weight S&P 500) liquid enough for a $737K position? Should we use RSP instead?
- With sequential college tuitions (2027-2031, 2032-2036), is our bond/cash buffer adequate?
- Any tax-loss harvesting opportunities in the taxable accounts we should consider?
- Is Broadcom (AVGO) in the Roth too much single-stock risk for a small account?
- Is our withdrawal sequencing right — taxable first, then SEP, Roth last?
- What are we missing? We also own real property (NYC, Hudson Valley, Amsterdam) and have cash in savings — does that change any recommendations?