"When to Sell a Stock "Winner"
episode
DIY Money | Personal Finance, Budgeting, Debt, Savings, Investing
11 min
3 speakers
4 chapters
transcribed 1 month ago
Transcript
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Transcript generated automatically by AI and may contain errors.
What is the main topic discussed in this episode?
Hey, this is Daniel. Thanks for listening to DIY Money. If you haven't already, be sure to give us a five-star review on iTunes so your friends know that they can learn from the show. Now, enjoy the show.
Welcome back, ladies and gentlemen. You're listening to another... I don't know why I pointed there. That was cheesy. You're listening to another edition of DIY Money. DIY Money. Welcome, Logan. Welcome. What are you doing? We're pointing. We're on video. Check it out on YouTube. I tell you, when you turn the cameras on, it's like... Chaos. It's chaos. What is going on in here? Hey, let's skip through all the nonsense today.
Yes.
Not that it's nonsense, because I do want to hear about your, you know, meat adventures, I guess, and all the rest of the stuff that you're doing on the grill. But let's go right to Corey, because he's got a doozy.
Corey, what do you got? D-I-Y! Hey, DIY team, this is Corey from Dallas with another question. I have a taxable investment account that I've had open for about four years and I've dollar cost averaged into that over that period of time. And I do have some individual equities as well as some ETFs that have done very well in that account. This was created with really just the intention to invest and grow that money over the long term. I didn't factor any of that into any savings goals or other financial goals. So I guess I'm just asking, what are ways to think about or maybe approach outsized gains and maybe the potential of using it to advance savings goals? you know, to start a business, things like that.
I just wanted to hear you guys' thoughts on that, or maybe it's best to not touch it and let those winners continue to run. So yeah, would just love any feedback or advice you guys had on that. You guys have a great day.
Okay, Corey, great question. I'm guessing he sent this before the bloodbath that's transpiring in the market right now. And he's like, would they get to the question, please? Because I'm losing money by the day. What is wrong with you people? So I'm going to approach this in a couple different ways, Corey. The first way I'm going to approach it, and I'm not sure what I'll leave you, but I'll do my best to leave you something. That sounds about right. So. The first way I'm going to approach this is if you have a taxable account, the taxable account is there either for another leg of the retirement stool or you have some sort of goal that's five years or more than you're saving for, right? So five years or less, we always say don't invest.
So if this is a taxable investment account, it should be serving one of two purposes.
What is Corey's situation with his taxable investment account and outsized gains?
The first purpose is, hey, I want to retire before I'm accessing my retirement accounts. I'm going to build this account up over time, and then I'll potentially use this account profitably. pre-retirement accounts for tax purposes often. The second could be, you know what, we may want to buy a house in the future or we want to do something in the future, you know, kids college or whatever, custodial accounts, whatever it might be. It's beyond the five-year window. You're investing for that. And as you get closer to that goal, It's a pure kind of like mathematics the wrong way, unemotional way of de-levering that. So sort of reducing the allocation over time just like you would be doing if you were approaching retirement when you're going to be basically using that money.
So, for example, my son, custodial account, and investing on his behalf as he's been getting closer to using the money for college, we are backing off risk, and I'm very happy that I'm doing that. Now, that's the first thing I'll say, and that's pretty simple, but I'm guessing you're not talking about that. I'm guessing you're talking about a couple of positions that have run considerably, and now you're like, oh, crap, what do I do?
So this is a guessing game.
In that case, I would circle back around to why you bought them. Now, Corey, I'm going to carve out ETFs. And I'm going to carve out ETFs because ETFs should be evolving and changing over time that you shouldn't need to do much for them.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:00–2:31
2
What is Corey's situation with his taxable investment account and outsized gains?
2:31–8:17
3
How should you define goals for a taxable investment account before buying stocks?
8:17–9:34
4
When is a taxable account appropriate for long‑term goals versus short‑term needs?
9:34–11:08