I recently got a stable job and started investing. Since I am in Europe and the majority of decent blogs are US-targeted I've made many mistakes along the way but I think I have stock or stock-ETF investing more or less figured out. I have problems understanding bonds (especially bond-ETFs) though, but that's a different story for a different question.

My situation:

All amounts are given without currency, since this should not matter and hopefully it'll be more general.

I'm around 30, planning to (semi) retire around 40 (if all goes well). Currently I make around 8k in cash and around 10k in stock monthly, while my spendings are around 4-5k. At the moment I have around 240k in mainly SP500/UStech ETFs, some in individual stock. It will grow to 300k at the end of the year when the part company's stock vests and I'd consider the starting point of calculations. That is assuming that SP500 will stay at the current level +- 20%.

When it happens I plan to get a 500k mortgage and stop buying new shares except for retirement/tax-shielded accounts, which have very low limits (north of 20k/year). Instead, I'll throw all cash into the mortgage and as soon as I'm done paying it (around 10-12 years) I'd like to retire at least partially.

The problem:

Now assuming my calculations are right that 300k should naturally grow to 600k in 7 years and to 1.2M in 14 years. Let's assume a bit pessimistic view: it'll grow less but with 10 years worth of 30k/yr retirement investing along it should total to 1M. Additionally, I'll have everything I got in stock from my company, which I assume will be another 1M, but we can consider that as a gravy. I am fully capable of retiring on 4% yearly from 1M.

The problem arises - in 15 years I'll have almost all of my net worth in my flat (which I'd not really consider as a part of my net worth) and stock only. How should I modify my plan to end up with a significant part of my portfolio in bonds without selling stock (thus paying tax)? Even if I convert all the stock in tax-shielded accounts it will amount to around 10-15% of my portfolio. That doesn't sound like it's enough. And even if it was, I cannot move that funds without tax implications before I am 60/65. This means that the investment horizon is much longer and I'd prefer to have it invested in stocks till I'm at least 55.

EDIT: Capital gains tax here is 19%.

  • 1
    "All amounts are given without currency, since this should not matter " - but it does, since you later mention tax. You also use the word 'flat', making me think you're in the UK. If you are, you should include the relevant tag. Taxation is about as jurisdiction-specific as you get...
    – AakashM
    Commented Jun 25, 2020 at 11:36
  • Added country tag and tax rate.
    – Mr. M
    Commented Jun 25, 2020 at 20:13

1 Answer 1


There are some specifics that will depend on your tax jurisdiction, but here's some generalities that may help:

When should I switch from stock to bonds?

You should start moving towards bonds or other low-risk vehicles when you can't (or don't want to) afford the risk associated with stocks. Typically that means that you're within 5 years of needing to cash out a significant portion of your portfolio (e.g. for your kids' college or for funding an endowment). Even someone who is close to retirement age but has a large retirement portfolio can still afford to lose 20% of their portfolio in a year with the knowledge that, historically, those losses have been temporary, and they can still live off of the income or perhaps sell some stocks to fund retirement until the market rebounds.

How should I modify my plan to end up with a significant part of my portfolio in bonds without selling stock (thus paying tax)?

Again, a complete answer is country-specific, but if you have access to tax-deferred retirement accounts, then you could start moving funds into them now so that when they grow you have room to reallocate your portfolio without immediate tax consequences. When I received large stock bonuses I would typically cash them out as soon as I could and move the funds into retirement accounts rather then taking the risk that the stock would lose value significantly (which it eventually did).

  • Added country tag. In Poland capital gains tax is 19% without any other conditions. I wrote that I am already using tax-deffered accounts but their limits are relatively small.
    – Mr. M
    Commented Jun 25, 2020 at 20:13

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