when to sell?

[FLBiker]

We're down to one income now because my wife is a SAHM (and will be for another year or so).  We can basically live on my income (while continuing to fully fund retirement accounts) but we might dip into our emergency fund a bit to do some house stuff.  I don't want to cut our retirement savings, so my plan is to make up any shortfall from our taxable (Vanguard index funds).  We currently have $30K in our emergency fund, of which we might spend say $10-15K between now and next September.  I tend to be overly conservative, though, so we might end up needing less than that.

My question is, is there any particular time I should sell to get additional "emergency fund" money or should I just wait until we actually need it?  I guess the reason I'm thinking I should sell sooner than later is because I know that I shouldn't have money with a short timeline in equities (I don't have bonds in the taxable).  At the same time, selling now (to avoid a potential dip) feels like market timing to me.

Sorry if this is a dumb question -- I've never withdrawn money from the market before!

[Chargem]

I don't think you should be selling any investments at all?

The point of an emergency fund is to prevent you from having to sell investments to cover expenses, so topping up your emergency fund via selling investments seems counter intuitive, especially when your conservative estimate is to still have $15k emergency fund after the year?

If I were you, I would cease all non retirement investments (if you haven't already) and then just top up your emergency fund back up to $30k as a priority in a year's time before any further non-retirement investing.

I also think the advice about not having short term cash in equities really relates to buying equity investments that you know you will have to sell soon, it doesn't apply after the investments are already purchased.

[Proud Foot]

You mentioned that you have investments in a taxable account, rather than selling maybe change your settings so any dividends and capital gains distributions are not reinvested but are deposited into your emergency fund.  Once you have spent the money and replenished your emergency fund then change the setting so they distributions are reinvested again.  Because this is in a taxable account you are already including these on your tax return so it will not change your taxes like selling with capital gains could.

[Eric]

What's the tax implication for selling?  If you're going to be in the 15% tax bracket (or lower) for 2016, then you can sell without capital gains as long as you've held the stocks/funds for at least a year.

Although this approach doesn't make much sense to me.  Personally, I'd use my cash first.  If an emergency happened, then I'd sell.

[FLBiker]

OK, thanks for the advice.

We've definitely be in the 15% tax bracket for the year, so taxes shouldn't be an issue.  And stopping the re-investment of dividends / capital gains temporarily seems reasonable.  My gut was telling me not to sell anything, and just to wait until I needed it, but I wanted to make sure that this potentially shorter time horizon didn't mean I should change my investments now.

Thanks!