Author Topic: WWYD - Investment choices  (Read 202 times)

kevinb421

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WWYD - Investment choices
« on: May 14, 2019, 09:44:37 AM »
Typical first world problem.
I have, at current value, around 40k of a violate asset(gone up 15% in the last 4 days) that I paid maybe 15k total for. It's just as likely that this asset will double in value this week or be cut in half.

I'm leaning towards setting an arbitrary goal of selling it once it reaches something like 100k or 150k. Currently I don't need the money for anything and selling now will just hit me hard with short term gains.

I'm sure the "smart" thing to do is just cash out, but 40k at my tax rate is brutal and it doesn't really do much to change anything. 100k or 150k however are much more significant numbers and with a 250k mortgage are actually substantial towards that goal.

I'm just looking for opinions on what you would do in a similar scenario -  40k value in something that taking it is a big tax bill, let it ride, cash it out and put it in the market, something I'm not seeing, etc.

Thanks all!

nereo

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Re: WWYD - Investment choices
« Reply #1 on: May 14, 2019, 12:57:47 PM »
You asked "WWYD" - so here's what I'd do.

I'd cash out and invest everything according to my AA (basically three index funds).  Speculating is gambling and I prefer to be an investor.

As for taxes -  you are only taxed on gains (so currently $25k in gains on a $15k investment).  You said STCG so you've held this for less than a year - if you're close to the 1 year mark I might wait it out until you get teh much more favorable LTCG rates... otherwise sell, as something this volatile is just as likely to be a loss in several months.  Setting a goal of a set dollar amount (e..g $100k) makes little sense from a tax perspective.

ETA:  You mentioned your tax rate is 'brutal' - the highest it goes in 2019 is 37% (earnings above $507k filing single) - most 'high earners' still fall in either 24% or 32% after all deductions and tax-advantaged accounts are utilized. As Buffalo Chip said just below - don't waste a dollar worrying about 30ish cents in taxes.
Are you using all your tax-advantaged headspace?
« Last Edit: May 14, 2019, 02:50:48 PM by nereo »

Buffalo Chip

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Re: WWYD - Investment choices
« Reply #2 on: May 14, 2019, 01:59:40 PM »
One piece of advice: donít spend or lose a dollar to save 30 cents in taxes.

better late

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Re: WWYD - Investment choices
« Reply #3 on: May 14, 2019, 04:56:51 PM »
Since youíre gambling, Iíd suggest you take $15k off the table and let the $25k ride.

bacchi

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Re: WWYD - Investment choices
« Reply #4 on: May 14, 2019, 07:37:15 PM »
Sell a call and buy a put. Protected against drops and forces you to sell.