Converting stocks/mutual funds to cas
I’m 75, my wife is 74. Until the recent market drop, we had roughly $3 million of investments distributed in various stocks, mutual fund IRAs, bonds, and some cash. It weighted about 60/40 , the lesser percentage in growth. I’m concerned about deep recession relative to escalation of the Ukraine situation and the U.S. getting pulled into a war. My question- if the market gets back close to the 34,000/35000 level, should we convert to more of our investments to cash to protect what we have? Thank you in advance for your reply.
Terry Says
A lot depends on your entire situation and your need for both cash and a good night’s sleep!
I’m assuming that these stocks/funds are NOT all inside an IRA.
For those INSIDE an IRA, the answer is simple. Sell half of everything– and move the proceeds to a Money Market fund inside the IRA. There will be no tax consequences. And the money will be available for RMDs.
Will you need to spend money OUTSIDE the IRA accounts during your retirement? Or do you plan to leave it to your children? That’s important, because if you die owning stocks with big gains, under current law, your beneficiaries won’t pay taxes on those gains. Their cost basis will be the value on the date of inheritance.
But if you think you are going to have a heart attack over losses in those accounts, follow the same advice — sell judiciously, and sell some starting now because when the market rallies (it may or may not) you will be less willing to sell! Put enough in CDs (yes, losing to inflation at today’s low CD rates) to let you sleep at night. But be aware of tax implications before you sell. Big enough gains could impact Medicare Part B andD premiums, or other govt programs.
You need a fee only FIDUCIARY financial advisor — one who can look over your entire situation and advise –because he or she is not getting commissions to have you sell or buy anything. Find one you can trust at www.Wealthramp.com
