Ask Terry Questions Bank Stocks

Bank Stocks

By Terry Savage on March 06, 2020 | Investments

My wife and I are 70 yrs young- we have 1.2 M in stocks, of those 600,000$ in bank stocks- should we sell some since market is so volatile?

Terry Says

I wouldn’t presume to give specific advice, but I will ask how you happen to be so concentrated in bank stocks. Was it an inheritance, or did you work for the bank and get the shares over the years of your employment? In that case, you would have to take taxes into the consequences of any decision to sell.
If you don’t need the money, and die owning the stocks, your heirs will get a ‘step-up’ up in “basis” or cost to the value at the date of your death. So that might be another reason to hang on. That’s assuming these shares are not held inside a retirement account.
Generally speaking, banks don’t do as well in times of low interest rates, because the “spread” between what they pay depositors and what they charge borrowers is squeezed. And, of course, not all banks are as well-managed as others. So a lot depends on the specific bank.

But I would suggest that you take a look at your overall financial picture and your exposure to stocks. At this stage, you’re likely not continuing to invest so you can’t really take advantage of lower stock prices. And you should have, I would suggest, 20 percent at least in liquid assets — CDs, money market funds, etc. You didn’t mention those in your question, so I’m hopeful that you just didn’t “count” that money in the assets you mentioned!



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