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Hi everyone,

My wife and I have about $30K worth of VZ which was inherited and sitting in an account at Computershare. It's doubled in value since 2005 as we're reinvesting the dividend, and as between jobs at the time, we're looking at possibly selling this as cashflow for the next few months.

Question is, since it's just been sitting there anyway - is it better to let it set another 15 years until retirement or pull $$ out of a different source, which are:

$180K in mutual funds at Vangard
$150K in HELOC credit at variable which is now 4.25%

Thanks for any advice and perspective!

-- john
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I had a similar problem recently, in deciding whether pay cash for a car, sell some stocks to pay for car or finance the car.

Since the interest rate to finance the car was 2.24% and my lowest paying dividend stock was 2.4%, I chose to pay 1/2 in cash (from emergency fund) and finance the other half. (I only took 1/4 of my ER fund.) Therefore, my dividend stocks are still whole and reinvesting the dividends 4 x yearly.

Although I have an ample HELOC, I would prefer not to use it, due to the fact that it is a variable interest rate (currently at 3.25%) and one never knows when the rates will increase. Plus, the interest rate charged by the bank for the car loan was quite a bit less than the HELOC interest rate.

Now, what is the yield on your mutual funds? Perhaps, you could sell some of the VZ and some of the mutual funds, but not all of either.

Donna (now rebuilding ER fund)
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No. of Recommendations: 7
My wife and I have about $30K worth of VZ which was inherited and sitting in an account at Computershare. It's doubled in value since 2005 as we're reinvesting the dividend, and as between jobs at the time, we're looking at possibly selling this as cashflow for the next few months.

Question is, since it's just been sitting there anyway - is it better to let it set another 15 years until retirement or pull $$ out of a different source, which are:

$180K in mutual funds at Vangard
$150K in HELOC credit at variable which is now 4.25%


I would say that you should not borrow to fund current living expenses while you have no income and assets in taxable accounts that are available to sell, so I would cross off borrowing from the HELOC as an option at this point.

I would also ask what percentage the VZ is of your overall investment portfolio, including 401(k)s, 403(b)s, IRAs, etc.? If it's more than 5% of your total invested assets, I would say that you are running a large single stock risk, and should probably be looking to sell this stock anyway. (It's about 14% of the $210k in assets you show, so unless assets in accounts that you aren't showing are at least $390k, it's over 5% of your total investment portfolio.)

Whatever assets you choose to sell, be sure that you set aside money to pay any taxes that you will incur, before you start spending any of the money from the sale of those assets. If you have been out of work for a while, and have a relatively low income so far this year, this might be a good time to sell highly appreciated assets anyway, as you may get a significantly lower tax rate. You may also want to look at making conversions from traditional accounts to Roth accounts this year, if it's a low income year, so you can take advantage of lower tax rates.

AJ
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is it better to let it set another 15 years...

How can anybody know what is going to happen in 15 years? Every holding needs to be re-evaluated on a daily basis. Read the news and check the chart. Fact is, this stock has done nothing since June.
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How can anybody know what is going to happen in 15 years?

Apparently the S&P500 B&H crowd, who're certain that when they need their retirement funds, such funds will be there, despite the volatility of the stock market.
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<It's doubled in value since 2005 as we're reinvesting the dividend, and as between jobs at the time, we're looking at possibly selling this as cashflow for the next few months>
I'll stand up for mr Verizon;
If you bought in 2005 do you know what your yield on it is? You might investigate that before you sell it all. I would bet that it is yielding pretty high. The stock is not overvalued and a pretty safe stock in my opinion. I recently bought more of it on this latest dip to add to what I already own. good luck...........
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If you bought in 2005 do you know what your yield on it is? You might investigate that before you sell it all. I would bet that it is yielding pretty high. The stock is not overvalued and a pretty safe stock in my opinion.

Verison's yield is 4.50%, regardless of when you bought it. http://finance.yahoo.com/q?s=vz

Whether a stock is "overvalued" and/or "pretty safe" are just opinions -- which have no bearing on the matter. As far as keeping a stock like VZ untouched for 15 years ..... take a look at Nokia. That's a high-risk industry.

The biggest issue I see is the risk, as AJ noted. 15% (30K of 180+30) of your portfolio in one company is much too risky.

Taking a quick look, from Jan'05 to now, the price-only (excluding dividends) gains are: VZ 40%, SPY 40%, FCNTX 63%.
Both SPY and FCNTX are lower risk than VZ, since they both contain hundreds of stocks.

With dividends reinvested, these are:
VZ 103% (indeed, doubled)
SPY 68%
FCNTX 109%

So not only has Fidelity Contrafund (FCNTX) approximately matched VZ, but it contains 300+ stocks, not just one. Much less risky.
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<Whether a stock is "overvalued" and/or "pretty safe" are just opinions>

You are correct, as I stated, it is my opinion that large U.S. telecom companies are safe, long term investments with a good dividend return. aka; VZ, T. I've owned ATT for 22 years and it has been very good to me and so I was passing my experience on for whatever that is worth.
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