Author Topic: Best way to increase cash position?  (Read 1550 times)

patjk

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Best way to increase cash position?
« on: August 16, 2018, 10:09:07 PM »
With the huge market gains over the last few years, I'd like to increase my cash position.  I've already slowed monthly investments, but actually want to sell some of the stocks/funds I own.  It would be a sense of security for me and would prefer to have cash rather than US stocks atm.  Right now most of my investments are just in a Schwab brokerage account (and intelligent portfolio), and a Wealthfront Personal Investment account.  I know they are taxed upon sale.  Is anyone else selling and raise their cash position? What are the best ways to do it effectively, tax wise?

Any tips/suggestions/advice are appreciated. Thanks.

MDM

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Re: Best way to increase cash position?
« Reply #1 on: August 16, 2018, 10:14:35 PM »
What are the best ways to do it effectively, tax wise?
1) Short term losses
2) Long term losses
3) Long term gains
4) Short term gains

This assumes you have set up your accounts to allow sale of individual, specified lots.

ILikeDividends

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Re: Best way to increase cash position?
« Reply #2 on: August 16, 2018, 10:21:51 PM »
Is anyone else selling and raise their cash position?

Probably.  I'm not.

What are the best ways to do it effectively, tax wise?

Have you maxed out your IRA contribution limits for the year?  If you haven't, you should do some checking around about whether you can do an in-kind transfer . . . <original text snipped during update>.

Update to add: Scratch the in-kind transfer idea.  Doesn't look like you can do it:

https://finance.zacks.com/transfer-stock-ira-7763.html

Idea #2: Sell enough of your long-term holdings to fund the after-tax max for a Roth IRA.  You won't escape taxes this year, but your Roth will grow, and can be withdrawn in the future, tax-free.

This, presumably, only addresses a fraction of your problem.  But every little bit helps.
« Last Edit: August 16, 2018, 11:10:09 PM by ILikeDividends »

DreamFIRE

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Re: Best way to increase cash position?
« Reply #3 on: August 17, 2018, 07:54:41 AM »
With the huge market gains over the last few years, I'd like to increase my cash position. 

Are you getting close to retirement and wanting to move to a more conservative AA, or are you just trying to time the market?  Market timing is normally frowned upon here.

trollwithamustache

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Re: Best way to increase cash position?
« Reply #4 on: August 17, 2018, 08:19:31 AM »
When I up cash, typically i just add new savings to cash holdings and try to leave the index funds alone.  Leaving them along being the point of them and all. This of course may not get you to your target cash% fast enough.

MustacheAndaHalf

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Re: Best way to increase cash position?
« Reply #5 on: August 17, 2018, 09:43:33 AM »
For someone in tax brackets of 15% LTCG and 22% ordinary tax, it might be better to sell $100 ST gains ($22 tax) instead of $200 of LT gains ($30 tax).

In general your brokerage should allow you to select "lot" style selling, where you select the group of shares to sell from a list of prior purchases.  That list should also say the gains of each lot, and how long ago it was bought.  From that you can decide which has the lowest tax impact.

One

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Re: Best way to increase cash position?
« Reply #6 on: August 17, 2018, 12:04:05 PM »
I would sell individual stocks first. Set up all holdings to pay dividends rather than reinvest. Let the index ride because if the market crashes the nerdy wonks in charge will figure out a new scheme to solve the problem. If you sell the index funds do spec id rather than first in first out to reduce tax burden. 

DS

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Re: Best way to increase cash position?
« Reply #7 on: August 17, 2018, 12:08:48 PM »
With the huge market gains over the last few years,

Which last few years?


FIRE@50

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Re: Best way to increase cash position?
« Reply #8 on: August 17, 2018, 12:09:58 PM »
I would sell individual stocks first. Set up all holdings to pay dividends rather than reinvest. Let the index ride because if the market crashes the nerdy wonks in charge will figure out a new scheme to solve the problem. If you sell the index funds do spec id rather than first in first out to reduce tax burden.
This was the first thing that popped into my head.