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Hi,

I have a current paper loss of about 22% in Vanguard Index 500 (VFINX). This account is a traditional IRA.

What are the advantages and disadvantages of selling now? This account represents about 9% of my total portfolio.

Are there other vechicles where I can gain 22% faster than the S&P 500? I don't know if that's a reasonable assesment.

Eric
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"I have a current paper loss of about 22% in Vanguard Index 500 (VFINX). This account is a traditional IRA.

What are the advantages and disadvantages of selling now? This account represents about 9% of my total portfolio.

Are there other vechicles where I can gain 22% faster than the S&P 500? I don't know if that's a reasonable assesment."

(Eric)


Well, Eric, I'm no investment pro, but if the contributions to your traditional IRA were deductible, then all dollars you take out when you retire ( both original contributions and earnings ) are taxed at your then prevailing rate.

So, I think there is no tax advantage to selling a loser in a traditional IRA, except that it frees up dollars to be reinvested through your IRA in , hopefully, winners.

By the way, IMHO, if you have taxable interest investments ( versus dividends ), they are better off in your IRA. Conversely, dividend generating investments are now better off in your taxable accounts, since they are only taxed at 15%.

The type of stock and other investments you should consider depends upon age until retirement and many other factors.


Hope this helps!

Murph
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Are there other vehicles where I can gain 22% faster than the S&P 500?

A car in Las Vegas?

Seriously though, in general the higher the potential return the higher the risk of loss. If you decide that your portfolio should be taking more risks you might consider investing in some higher risk items with money outside of your retirement accounts so that you can take a tax deduction for the capital loss if they do badly.

Greg
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