No, an IRA account is not taxable on gains or losses. Income taxes are assessed when you withdraw money from the IRA to spend.
I sold all my stocks and bonds today.
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The key word is "all," imho. Also that there is a plan to buy back lower. Fundamentally, if it works out, it was luck, not strategy.
Me, rethinking what I said, I don't believe in luck. Really. But, I do believe in fate. So if it does work out, fate was on OP's side.
I have a friend that cashed out everything during the COVID drop. He never went back in until 2023. When I asked him why he simply said “I was waiting for the drop that just never happened.”
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One problem as I see it, is they don't see the fallacy in what they did. I do--I did this in the 90's and thankfully the fire I was playing with was less impactful. I sold amazon in 2001--that is a very expensive woulda coulda shoulda. But, I'm glad to have Broadcom. Again, we have to be comfortable in our own skin.
My cousin told me many investors end up practicing sell high, buyback higher. And they repeat, i.e. minimize their returns.
Edit correction to what my cousin said
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The S&P 500 is 5970 today, Dec, 28, 2024. Let’s just call it 6,000. Good luck everyone.
OMG. Do you hire a professional driver to take you places because they’re more capable? Do you employ a full time chef or housekeeper because they’re better at what they do?
Most financial advisors started out as something else, found themselves in a dead end job, and made a career switch to investment sales. They spout the same conventional herd wisdom that is always wrong.
This is 100% correct. Trying to time the market is a fools errand. If allocated correctly you let it ride. If you want to gamble on feelings and time the market, certain money should be set aside to do so and not be depended upon for retirement.
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Correct, buying/selling within an IRA, SEP, 401k, 403b, etc is not a taxable event. Withdrawing the money from the retirement account is absolutely a taxable event (not ROTH).
If the OP sold equities and bonds and bought money market within the IRA, there is zero tax due.
Look, investing on emotion is always, and I mean, always, a terrible idea. Look at all the people who sold because “XXX was elected”. In the past 8 years, those people have missed out on huge gains. Their predictions of financial ruin were inflated by their emotion about the candidate in question. They made emotional decisions that severely, negatively, impacted their net worth.
However, look at the OP and his situation. Well into retirement. Expenses paid.
This is a good time to revisit your asset allocation - and one of the fundamental determinants of a proper asset allocation is risk tolerance. AKA “What allows you to sleep at night”?
In his position, I view this as a revisiting of his asset allocation.
He chose much differently than I would, than Mrs. Astro and I would. She is an agressive investor, and she is the one that suggested we buy Amazon in 2010, NVDIA last year, etc. We also have two USN officer pensions, and her GS pension. Those need to be included in our risk tolerance and asset allocation.
While Bonds have been a terrible investment over the past 10-15 years, because of interest rates, and cash has gotten hammered because inflation devalued it, revisiting your asset allocation as you cross over into your 70s is a sensible move.
I would reach a different balance and allocation in my portfolio than the OP, but I’m not convinced this is a bad move for him.
However, look at the OP and his situation. Well into retirement. Expenses paid.
This is a good time to revisit your asset allocation - and one of the fundamental determinants of a proper asset allocation is risk tolerance. AKA “What allows you to sleep at night”?
In his position, I view this as a revisiting of his asset allocation.
He chose much differently than I would, than Mrs. Astro and I would. She is an agressive investor, and she is the one that suggested we buy Amazon in 2010, NVDIA last year, etc. We also have two USN officer pensions, and her GS pension. Those need to be included in our risk tolerance and asset allocation.
While Bonds have been a terrible investment over the past 10-15 years, because of interest rates, and cash has gotten hammered because inflation devalued it, revisiting your asset allocation as you cross over into your 70s is a sensible move.
I would reach a different balance and allocation in my portfolio than the OP, but I’m not convinced this is a bad move for him.
Yep. If you follow this thread, the world was ending a couple of years ago...
The OP is not the first to go “all cash because…” and post it on BITOG. Far from it. Happens every couple of months, usually after a presidential election, but happens often.
We started this thread two years ago. Makes for interesting reading:
This thread got unwieldy, and is closed for further posts, but goes back quite a way. Lots of folks posted about going all cash because…. Also, very interesting reading…
Hey guys,
I sold my shares of Sun Microsystems (SUNW) today.....they've been getting their arse handed to them by IBM and HP and their quarterly report was not impressive at all. I sold out and made a $40 profit
, so I'm not losing any money here.
Share prices have risen rapidly in the last few weeks, but some "experts" think that it is going to take a while before Sun can once again compete with its rivals.
I also own Lucent Tech (LU) and my shares are up 108.90%...
I sold my shares of Sun Microsystems (SUNW) today.....they've been getting their arse handed to them by IBM and HP and their quarterly report was not impressive at all. I sold out and made a $40 profit
Share prices have risen rapidly in the last few weeks, but some "experts" think that it is going to take a while before Sun can once again compete with its rivals.
I also own Lucent Tech (LU) and my shares are up 108.90%...
I have to believe tons of time and $$ have gone into computer systems and whatever to predict the future.
If it worked, everyone would do it. So far so bad.
My personal thoughts? "Balance, Grasshopper... Don't get too high; don't get too low. And I wish you luck."
Last I checked, Vanguards retirement funds contain 20% or 30% in equities. That said John Bogle, founder of Vanguard said "sell to the sleeping point. " So is a cash portfolio appropriate? Maybe for some people.
The OP said he was getting out now and getting back in later. But your point is well taken.
tax cuts ballooning federal deficits, more inflation, interest rates not declining, tariffs suppressing demand. More things looking negative than positive.
You can certainly make that case. And it might be bad... But the corollary is, the stock market is not the economy; it is part of the economy.
What part? Who owns the Market?
- Top 10%: Own 93% of all stocks, the highest level ever recorded
- Top 1%: Own over $16 trillion in stocks
- Bottom 50%: Own just 1% of all stocks and mutual fund shares
Just a thought; who the heck knows where this thing will go?
Good luck in your investing endeavours.
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Interesting you did all.
To my various above posts I would add: I am a dividend investor. As such, my only real risk is a dividend reduction. Share price does not affect me until I sell.
Still, I am at a point where my comfort level has changed, and I would like to reduce my exposure. In this regard, I agree with the OP.
Still, I am at a point where my comfort level has changed, and I would like to reduce my exposure. In this regard, I agree with the OP.
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