Joe Pinsker
speaker
1,247 appearances
30 recordings
1 series
first heard Oct 2022
last heard Jan 2025
Joe Pinsker’s voice in public audio — every appearance, attributed to the second.
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Appearances
So to put this in basic terms, if you had a $1,000 loss on one stock and a $1,000 gain on another stock,
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those would cancel each other out and you wouldn't owe taxes on the gain.
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As I said, we aren't exactly rooting for losses in our portfolio, but if there are underperforming stocks that you hold and that you've been meaning to sell, a moment when stock prices are down could give you a bit of a tax benefit.
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This is where something called a Roth conversion enters the picture.
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The idea is that when you turn a traditional retirement account into a Roth IRA or a Roth 401k, doing that means that you have to pay some taxes.
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The benefit of a Roth account is that you are spared from having to pay taxes on future investment gains
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But when making this switch from a traditional account to a Roth, there can be sometimes a big tax bill because you are taxed on the money of the pre-tax account at your current income tax rate.
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So basically, when stock prices are down, doing a Roth conversion becomes more affordable.
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If you had a portfolio that was worth
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$50,000 on Friday, and let's just say hypothetically, it's worth something like $45,000 on Monday, converting that account to a Roth actually is going to come with a smaller tax bill because the value of the account is smaller.
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Advisors' starting point for thinking about this usually is to say that you should assess your finances and see if there's money that you don't expect to need for some number of years.
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Anytime that you're putting money into the market, they say it's good to not need it right away.
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And so what people could do at this point is if there's money that they have in a money market account or a high yield savings account that they've been maybe taking advantage of high interest rates lately, they might be able to deploy that money into a longer term investment and a drop in stock prices could be a moment to do that.
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Similarly, something that investors can do at this moment is take a peek at their retirement accounts.
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A lot of people have cash sitting in their 401ks that's just uninvested.
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And what you could do is use this as a nudge moment to put that into the market now or into bonds so that you don't miss out on longer run returns.
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And for both of those strategies, there is a risk of what one financial advisor I was in touch with called buyer's remorse, where you put money into the market and then all of a sudden it goes down a couple of days later.
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If you want to avoid those feelings of regret, what you could do is instead of putting a big chunk of money into an investment all at once, you can do it incrementally, maybe 10% of it each week for 10 weeks.
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And that way you aren't following so much what happens in the days after your investment.
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Here's where language gets really important.
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Showing 321–340 of 1,247 · page 17 of 63
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