Course 304: Strategies for Selling
When to Think About Waiting
In this course
1 Introduction
2 Just How Big a Gain Are You Looking At?
3 When to Sell and Accept the Tax Consequences
4 When to Think About Waiting

Sometimes it may pay for you to hold on to a sell candidate, at least for a while longer.

If you haven't owned the stock or fund for at least one year. If you haven't held the investment for at least one year, you'll be subject to short-term capital-gains rates on your sale, which can be dramatically higher than the long-term capital-gains rate. Soconsider waiting to sell the security until you've passed the one-year mark.

The stock or fund has consistent performance and is not overly volatile. You may want to sell an investment because a new opportunity has presented itself, or because its growth is slowing. But if this is only a moderately risky investment, consider whether you really need to sell it. How bad are things likely to get? So bad that the tax consequences are worth it? Perhaps not.

The investment isn't messing up your asset allocation or threatening diversification. If the investment that you want to sell takes up only a small portion of your portfolio and isn't throwing your portfolio off-kilter, you may not need to sell immediately. Consider selling a little bit of your position each year, thereby minimizing the tax hit.

You just can't take a big capital-gains tax hit right now. Look at the rest of your financial life. Perhaps you exercised some incentive stock options and have to pay Alternative Minimum Taxes this year. Or you have fewer write-offs than usual. Or you'll be paying estate taxes soon. Now may be a bad time to add capital-gains taxes to the mix.

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