Hello!New poster here. I have only a few years experience investing at home for family purposes. I have investments in a few 403b's, Roths, and then every month I invest outside of retirement in a taxable brokerage account.The vast majority of my investments are in index funds, index ETF's and other basic "safer bets", including a few international stock funds and even merging markets.My question: Now that we appear to be at a very low point, at least, if not frankly at dead bottom generally speaking... What is a good strategy to use in order to sell off a few duds, collect a loss and move on to greener pastures (for me, probably DCA reallocating into a better mix).Furthermore, is this a relevant strategy? I've found myself searching for posts about this and have not been very lucky. Hold or just sell off! are the strategies I seem to find. The things I would like to ditch include a few stocks, since frankly I am just not a stock investor and don't necessarily care to be, I like the buffer that funds provide and the auto-diversity inherent in the size a fund or ETF. I intend to buy and hold for years to decades. Let me be clear about my question, I seek to learn if I should simply sell off a few stocks and a few volatile funds that I do not want any longer, take a loss that I can carry into the next year or two, and reallocate into better bets for the next decade. Do I do this now and take a good loss, or wait? Do I not do this at all? I understand wash sale law, so I am OK with that.Thanks for your help, fools!
Hi coopiedaddy,Selling losers in your taxable account might make sense. The two rules of thumb I would use are as follows:1) Is your taxable income sufficient for the loss to make a difference? For most working adults with stock investments, the answer is "yes." But retirees with low taxable income won't get as much advantage.2) Do you have other investment choices in mind that you think will outperform the recovery of your losers? Today we're seeing some fabulous companies selling at huge discounts. As I type this, Procter & Gamble (PG) is selling 23% below its 52-week high, down 5% at 1 PM today alone. That's totally irrational. PG is not a stock I would sell. On the other hand, my daughter still has some shares of Fanny Mae (FNM) in her taxable account -- a definite loss she should lock in for tax purposes.Cheers,Doug
Doug,Thanks for your reply!I would say the answer to my first question is yes. I am 31, married in two income household w/ AGI generally somewhere over 110, newer house with plenty of interest paid this year, graduate school tuition expenses, one (new) child, but hopefully still enough to claim this loss.The second question would also be a yes, but unsure, really. I would say that for me to sell, say PRUdential, bought at a lousy price to appease my wife, whose PRU stock I sold that her grandfather gave her in order to re-buy it within the brokerage (probably a mistake), and to buy into one of my favorites, index funds or even TIPS, like VIPSX might be a wise move for me.Should I limit this move to long term holds, over one year? I like the idea of capitalizing on the "bad times" by restructuring a bit and cleaning house before the stocks rise again (and they will)!thanks again!
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