Author Topic: Sell winners or spend cash savings?  (Read 549 times)

Must Stache

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Sell winners or spend cash savings?
« on: April 26, 2017, 06:14:56 AM »
Looking for some advice:

Let's say I have a $30K debt that I need to pay off next month.  I currently have $30K sitting in a savings account earning 1%.  This is my only cash savings outside of my investment portfolio.  I also have a taxable investment account in which I invested $500K, but it is now worth $530K because of the recent bull market.  Am I better off to sell $30K from my investment portfolio to capture those gains or just let it keep growing and instead use the cash I have sitting in the savings account to pay off the debt? 

It seems like maybe this is a "timing the market" question, but I would appreciate any thoughts! 

MasterStache

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Re: Sell winners or spend cash savings?
« Reply #1 on: April 26, 2017, 06:26:46 AM »
Not sure why you would pull money out of investments to pay off a debt when you have the money in savings.

L.A.S.

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Re: Sell winners or spend cash savings?
« Reply #2 on: April 26, 2017, 06:31:38 AM »
You should draw from the various sources so that after your asset allocations are in line with your desired percentages.

Nothing says the 30K used to pay off the debt all has to come from the same spot.  You could take 20K from savings and 10K from investments or visa versa.

Also keep in mind that if you have held the investments less than 1 year any gains you realize will be taxed at your highest marginal tax rate on the realized gain.  The lower long-term capital gains rate is only available for gains on investments held longer than 1 year.

Must Stache

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Re: Sell winners or spend cash savings?
« Reply #3 on: April 26, 2017, 08:30:15 AM »
Not sure why you would pull money out of investments to pay off a debt when you have the money in savings.

My thinking was to capture the $30K in gains, while preserving my cash savings for future opportunities.  I'm a little nervous about depleting my cash reserves entirely.   

MasterStache

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Re: Sell winners or spend cash savings?
« Reply #4 on: April 26, 2017, 08:38:59 AM »
Not sure why you would pull money out of investments to pay off a debt when you have the money in savings.

My thinking was to capture the $30K in gains, while preserving my cash savings for future opportunities.  I'm a little nervous about depleting my cash reserves entirely.

Sounds like market timing. 

Must Stache

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Re: Sell winners or spend cash savings?
« Reply #5 on: April 26, 2017, 08:48:10 AM »
Not sure why you would pull money out of investments to pay off a debt when you have the money in savings.

My thinking was to capture the $30K in gains, while preserving my cash savings for future opportunities.  I'm a little nervous about depleting my cash reserves entirely.

Good suggestion for taking some from different places.  Thank you.

As for the taxes, I have to look at the specific holdings, but most have been more than 1 year.

Must Stache

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Re: Sell winners or spend cash savings?
« Reply #6 on: April 26, 2017, 08:49:44 AM »
Not sure why you would pull money out of investments to pay off a debt when you have the money in savings.

My thinking was to capture the $30K in gains, while preserving my cash savings for future opportunities.  I'm a little nervous about depleting my cash reserves entirely.

Good suggestion for taking some from different places.  Thank you.

As for the taxes, I have to look at the specific holdings, but most have been more than 1 year.

Whoops, I meant to respond to L.A.S. here.