This article is an outgrowth of my own research on how your taxes reduce the money you have in retirement to spend. Those taxes come from many directions while you are working and then when you are retired. Most people accept them as a necessary evil to increase their net worth and accumulate a retirement nest egg. In August I wrote “ Dividends Aren't For Taxable Accounts,” which was part 1 in this journey. Now three months later the positions have been filled to my satisfaction, leaving 20% in cash, just in case some of my patience brings something I can’t pass up or I just need some extra cash to spend without selling any long-term holdings.

First a quick review of the strategy behind this portfolio.

Setup and Ground Rules

I will invest in 10 Non-dividend paying stocks that are initially contained within the S&P 500 index and put them in a brokerage, or taxable account, at a price that is depressed to their recent high.

If they are later dropped from the index I may sell and reallocate or do nothing.

If they later decide to pay a dividend I will try and sell prior to the x-date and reallocate the cash to a new stock or the ones remaining.

When I invest the cash into these 10 stocks, I will generally invest an equal dollar amount into each 10 using the features of a broker which allows this type of “dollar” investing instead of “share” investing.

The end game of this strategy is to use it as a future inheritance in which the patience of not trading positions, at least on a regular basis, will pay big dividends due to current tax laws which step up the basis of your investments in a taxable account.

In the spreadsheet below I will show a scaled value of $100k.

This last bullet point was changed to add a small position of the equally weighted S&P 500 ETF (RSP).

Starting Positions

Below is an allocation by Sector:

Communication Services

Facebook (META) Alphabet Inc (GOOGL) Netflix Inc (NFLX

Consumer Discretionary

Amazon (AMZN) Chipotle Mexican Grill Inc (CMG) Tesla (TSLA)

Financials

Berkshire Hathaway Inc (BRK.B)

Industrials

Boeing (BA)

Information Technology

Salesforce Inc (CRM) PayPal Holdings Inc (PYPL)

Below are the current standings as of 11/15/22

My spreadsheet of real data scaled to a cost basis of $100k

As can be seen from the above, two positions did not get filled for the simple reason that their valuation ran too fast away from my initial buy point and so I decided to not chase them. These stocks were CMG and NFLX which currently are sitting on gains of 17.5% and 77.5% respectively. With some of the money left over I decided to put it in AMZN, as a company that meets all the qualities of a good growth company. In fact, the American Association of Individual Investors just put it into their newly created model portfolio of growth companies as of Nov. 7th. Using the AAII Growth Investing tools shows the below report card of AMZN as it relates to their own proprietary growth investing scores: