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stock market

Carron

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Is anyone considering/selling off stock with the market being so high? So tempting with a correction likely, but those pesky capital gains.....
 

bluehende

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I sold some Friday. It was the QQQ's I have held since 2008. I have become a bit over exposed to the market with the recent gains so it was as much an allocation move. With the market going up now for over 10 yrs without a big correction I feel it is overdue. However I have felt that way for 4 yrs so take my opinion with a grain of salt. Also my income is low now but in a few years I will take SS and it will move up. Right now I can book quite a bit of capital gains and pay no taxes on it.
 

DavidnRobin

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Is anyone considering/selling off stock with the market being so high? So tempting with a correction likely, but those pesky capital gains.....
There is no straightforward way to answer this as it depends on too many factors based on your individual financial situations. Time horizons. income, assets, diversity, expenses, tax considerations, balancing losses, etc.

Pesky Capital Gains?
The tax rate on long term capital gains is lower than ordinary income, and at some income levels - zero tax.

I have sold long-term holdings while rebalancing our assets. This a good financial practice.


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capjak

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If you need to rebalance to your selected asset allocation than yes go ahead, otherwise it sounds like market timing. The market has been high off and on for a long time.....I can not predict what it will be when I need to take the money out and spend it in 20+ years.....can you?
 

Talent312

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Some Peter Lynch ("One Up on Wall Street") quotes come to mind:
--"Gentlemen who prefer bonds don’t know what they are missing."
--"In the long run, a portfolio of well chosen stocks and/or equity mutual funds will always outperform a portfolio of bonds or a money-market account."

Lastly:
--"The trick is not to learn to trust your gut feelings, but rather to discipline yourself to ignore them."
.
 

rapmarks

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I sold some Friday. It was the QQQ's I have held since 2008. I have become a bit over exposed to the market with the recent gains so it was as much an allocation move. With the market going up now for over 10 yrs without a big correction I feel it is overdue. However I have felt that way for 4 yrs so take my opinion with a grain of salt. Also my income is low now but in a few years I will take SS and it will move up. Right now I can book quite a bit of capital gains and pay no taxes on it.
I bought QQQ when it was low, that is a good gainer, one of the few things I did right, but we can’t affort the capital gains. Just got a redemption notice, more bonds were called.
 

Brett

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I've also done some 'rebalancing' of financial assets but not because of any perceived market timing, more of a readjustment because I'm getting older
 

Quiet Pine

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I manage my kids IRAs and moved them from stocks into a Low Duration Bond Fund...George
I did the same thing with my grandsons' college accounts, but mostly because they're 16 & 18 and don't have time to recover from a downturn. It hurts to see them miss out on new market highs, but I'm a Certified Financial Planner and have to follow my own advice!
 

VacationForever

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Our investments are managed by a company and while I told them to put about half the funds in 100% stocks since we won't draw on them for 30 years but for most part our FA kept the portfolio at 60-35-5, stock-bond-cash. They kept some smaller accounts in pure dividend stocks and 5-year notes pegged to stocks index. He said their job is to ensure that we won't ever be poor. We are fine with that. We did talk about rebalancing from stocks to bonds when there are signs of the market going bearish but so far the firm's research arm said not yet.
 

CalGalTraveler

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We are dollar-cost averaging out some of our investment because we have college bills. We are selling such that when the market hits a new high, we sell another tranche to have cash ready for the next school year. Our retirement funds remain in the market because we have 5+ years until retirement. We also have a hefty percentage in cash and bonds to balance this out.

I am glad we went against the conventional wisdom to sell everything before your kids enter college. We not only would have had a large capital gains bill during the Junior/Senior year in high school, but we would have missed out on the substantial gains over the past 3 years which makes this money last longer.

Risky? Maybe. This wouldn't have worked if the market crashed but as a backup we have cash in treasury bonds paying 3 - 5 % expiring in 2032 which we could tap if the market tanks and we need to wait for the stock market to recover. It was a calculated risk with a backup plan.
 
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Fredflintstone

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We are dollar-cost averaging out some of our investment because we have college bills. We are selling such that when the market hits a new high, we sell another tranche to have cash ready for the next school year. Our retirement funds remain in the market because we have 5+ years until retirement. We also have a hefty percentage in cash and bonds to balance this out.

I am glad we went against the conventional wisdom to sell everything before your kids enter college. We not only would have had a large capital gains bill during the Junior/Senior year in high school, but we would have missed out on the substantial gains over the past 3 years which makes this money last longer.

Risky? Maybe this wouldn't have worked if the market crashed but as a backup we have cash in treasury bonds paying 3 - 5 % expiring in 2032 which we could tap if the market tanks and we need to wait for the stock market to recover.
Although I’m not an investment specialist, I like your idea to diversify some into money market or T bills. Stocks do go up and down and the only way I find stocks work is if I’m not desperate to withdraw them. Timing is everything with those.

I have mine with a financial advisor with a large bank who manages it well. I know some folks (like Dave Ramsey) prefer to use small credit unions but I guess I am old fashioned. I just feel safer for some reason to use a large bank as I believe (maybe wrongly) a large bank is more stable.


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Sugarcubesea

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I do a rebalance every year to ensure I’m sticking to the allocation that allows me to sleep at night.

I’m 58 and just this year moved 25% into bonds as I’m 7 years from retirement. Magic 65 that allows me to have insurance vs having to pay for my own till I hit 65. I’m downsizing my house next year and moving to a condo so that I will no longer have outside maintenance and no longer have a mortgage
 
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Fredflintstone

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I do a rebalance way year to ensure I’m sticking to the allocation that allows me to sleep at night.

I’m 58 and just this year moved 25% into bonds as I’m 7 years from retirement. Magic 65 that allows me to have insurance vs having to pay for my own till I hit 65. I’m downsizing my house next year and moving to a condo so that I will no longer have outside maintenance and no longer have a mortgage
Your thinking reminds me of the “Couch Potato” approach which has proven to be quite smart. I think downsizing is also smart. After all, you don’t need the same space as when you were raising kids. True that you don’t want maintenance either and I think it’s easier to leave the place when you travel too. No mortgage? Oh yeah! It’s amazing how little you can live on when you don’t have payments, especially an expensive mortgage.

Since I have begun to simplify my life with hardly any payments, it’s amazing how free you truly feel. That was partly why I dumped my timeshares and only rent. I saw the MF as payments. I see renting as using money saved to travel. I go when I can afford to versus saving for an MF payment and then save to actually enjoy the vacation.

IMO, you are thinking clearly and I suspect will have a wonderful retirement.




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CalGalTraveler

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Although I’m not an investment specialist, I like your idea to diversify some into money market or T bills. Stocks do go up and down and the only way I find stocks work is if I’m not desperate to withdraw them. Timing is everything with those.

I have mine with a financial advisor with a large bank who manages it well. I know some folks (like Dave Ramsey) prefer to use small credit unions but I guess I am old fashioned. I just feel safer for some reason to use a large bank as I believe (maybe wrongly) a large bank is more stable.


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In the US we have FDIC insurance up to $250,000, so it doesn't matter if it is with a small or large bank as long as it is insured.
 

Fredflintstone

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In the US we have FDIC insurance up to $250,000, so it doesn't matter if it is with a small or large bank as long as it is insured.
We have similar in Canada but many things aren’t covered like stocks, mutuals...from what I understand, savings accounts and maybe T bills are.


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CalGalTraveler

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We have similar in Canada but many things aren’t covered like stocks, mutuals...from what I understand, savings accounts and maybe T bills are.


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Similar. Stocks, mutual funds, bonds, not covered in US as well but that's where you need to hedge to get bigger returns.
 

WinniWoman

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Is anyone considering/selling off stock with the market being so high? So tempting with a correction likely, but those pesky capital gains.....
My brother (age 60) said he is. Lowering it to 25% of assets. We are at something like 30% anyway. Talking with financial planner next week, but I (age 63/hubby age 65) was really not considering lowering it.
 

WinniWoman

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Our 31 year old son who pays no attention to his money has 100% in stock funds (401K and Roth IRA). I wonder what I should advise him?
 

CalGalTraveler

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I do a rebalance every year to ensure I’m sticking to the allocation that allows me to sleep at night.

I’m 58 and just this year moved 25% into bonds as I’m 7 years from retirement. Magic 65 that allows me to have insurance vs having to pay for my own till I hit 65. I’m downsizing my house next year and moving to a condo so that I will no longer have outside maintenance and no longer have a mortgage
We are in similar age bracket but not yet ready to downsize. However it is nice to dream of downsizing and be able to retire right now and live on the proceeds. But we would need to move out of California and our lovely home and neighborhood which we don't want to do right now.
 
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CalGalTraveler

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Our 31 year old son who pays no attention to his money has 100% in stock funds (401K and Roth IRA). I wonder what I should advise him?
Don't worry. He is young and won't need the money until he retires. We have lived through 3 major ups and downs in the stock market. Left the money there and it returned stronger every time. He has time on his side.

Rule of thumb is your allocation between stock and fixed income (safe) is: 100 - your age.
 

WinniWoman

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IMO..Nothing. At least he’s saving. He will naturally learn if he loses money


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Hopefully he will know if he loses money because he never looks at a statement or anything! Believe it! I know- crazy.
 

Fredflintstone

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I was reading an article the other day from a respected financial advisor and he said 73 percent (based on bank data) of the population will retire poor because of ....

Savings rate.

Yup, you guessed it...they don’t save in the first place. So anyone who saves regularly will do well and most will retire wealthy.

Good for your son saving in the first place.


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