Author Topic: Selling my condo...now what?  (Read 668 times)

lightaFIRE

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Selling my condo...now what?
« on: June 01, 2019, 07:34:28 PM »
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« Last Edit: January 23, 2020, 02:28:34 PM by iguana »

Papa bear

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Re: Selling my condo...now what?
« Reply #1 on: June 02, 2019, 06:24:37 AM »
Primary residence or rental?  If its a rental, you will need to factor in capital gains tax and depreciation recapture.

As for the money?  Id probably dca it into index funds. Follow the investment order guidelines that someone else will probably post.


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nereo

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Re: Selling my condo...now what?
« Reply #2 on: June 03, 2019, 07:03:12 AM »
Thanks for taking the time to read my post.

It's a rental, and my accountant factored in the taxes and depreciation recapture.

What does "dca it" mean?
Dollar Cost Average.  In other words, Papa Bear is saying he would invest it periodically over a series of (most likely) months rather than invest it all in one go.    For example, if your ultimate take-home from the sale was $120,000, you could 'DCA' the proceeds by investing $10,000 every month for 12 months (or $5k/month over 2 years, etc).

Any time DCA comes up it worth noting that most of the time lump-sum investing wins out, though there are both psychological and capital-preservation reasons for DCAing. 
A few articles which go further into DCA/Lump sum investing

https://jlcollinsnh.com/2014/11/12/stocks-part-xxvii-why-i-dont-like-dollar-cost-averaging/
https://www.mikeandlauren.com/what-is-your-emotional-threshold-when-investing/
https://personal.vanguard.com/pdf/s315.pdf (note, opens PDF)
https://www.bogleheads.org/forum/viewtopic.php?t=216498


nereo

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Re: Selling my condo...now what?
« Reply #3 on: June 03, 2019, 07:07:03 AM »
In further response to your original question - I'd use the proceeeds from the sale to reduce your taxable burden as much as possible.  For example, if you are not already maxing out your IRA/401(k) options, do so now, and use the proceeds from the sale to make up the difference in your paycheck.   

If it were me, that's what I'd do... I take whatever tax-advantaged 'headroom space' I have left and fill that with the sale, then lump-sum the rest into my existing index funds.