Can I take $$ out of stocks?

[gayl]

My daughter is just back to work. She was never eligible for UI because she left work Feb 2021 not because of pandemic. Her savings sustained her while she tried to find work and just started with her previous employer. (Lost naturalization papers and state dept is SO SLOW so can't do a I9) Anyway her car died so I paid 16k towards a used one. I don't like using all my cash so I'm thinking of selling 40 sh SCHB. I live on my pension, have 6k in income, about 1m in stocks, and a paid off 1m house (per zillow). I don't take anything out of stocks yet. Eventually when I hit RMD I will have to just not yet. If I sell 40sh add that to my EF, it should be back to 30k within 3 months. Otherwise its just 20k.

WWYD?

 

[Gumby]

Does she have a US passport? Would that suffice in lieu of the certificate of naturalization? A passport is how I proved citizenship in order to collect social security and to work at my last three employers. (I am an immigrant and obsessively protective of my certificate. I felt far less fearful mailing my passport to SSA.)

Sorry, not exactly the question you asked, but the thought occurred to me, which could be helpful if she wants to change employers.

 

[chassis]

My daughter is just back to work. She was never eligible for UI because she left work Feb 2021 not because of pandemic. Her savings sustained her while she tried to find work and just started with her previous employer. (Lost naturalization papers and state dept is SO SLOW so can't do a I9) Anyway her car died so I paid 16k towards a used one. I don't like using all my cash so I'm thinking of selling 40 sh SCHB. I live on my pension, have 6k in income, about 1m in stocks, and a paid off 1m house (per zillow). I don't take anything out of stocks yet. Eventually when I hit RMD I will have to just not yet. If I sell 40sh add that to my EF, it should be back to 30k within 3 months. Otherwise its just 20k.

WWYD?

The options are debt, cash (savings) or liquidate assets (sell investments).

It sounds like you used cash to pay the $16k. Since the time is now after the fact, it seems like selling investments, and/or a temporary reduction in living expenses will replenish your cash balance.

 

[RetiredHappy]

Are you over 59.5 yo? Presumably your stocks are in an IRA account so you will incur tax on any withdrawal. If your tax bracket is low, withdrawal will not incur much taxes. For us, we have about 3% to 5% of our net worth sitting as cash "everywhere" - checking/savings, taxable and tax deferred accounts. We make use of dividend reinvestments or not to keep the desired amount of cash in each investment account.

 

[gayl]

Does she have a US passport? Would that suffice in lieu of the certificate of naturalization?

Unfortunately no but she can replace it eventually

Are you over 59.5 yo?

yes but I don't want to take from IRA

The options are debt, cash (savings) or liquidate assets (sell investments).

It sounds like you used cash to pay the $16k. Since the time is now after the fact, it seems like selling investments, and/or a temporary reduction in living expenses will replenish your cash balance.

Yes I used my emergency fund which is now at just 14k. I guess I could cut back for several months (6?) and I'm not sure I want to.

I keep thinking its such a small amount that eventual compounding can replace it

 

[Jerry1]

WWYD?

I’d look at my stocks relative to my income and if I could liquidate some stock and get favorable capital gains treatment (no tax), that’s what I would do.

Alternatively, with $14K in my emergency fund, I might try to sit it out for awhile and see if it will replenish without me taking to big of a hit in my standard of living. It’s just that the tax free capital gains is a real nice option, if it’s there.

 

[RobbieB]

Now is a good time to sell equities. Why not sell 20 shares?

 

[RetiredHappy]

Don't your stocks generate some dividends, unless they are all growth tech stocks which most do not generate dividends? If they do, then just do not reinvest dividends and in no time you should get the $14K cash back in the account.

 

[gayl]

So if I sell 40 shares I incur only 1232.98 short term cap gains but also cover a lot of the amount I took out for the car. Then stash 1700 month & dividends. 28% cap gains tax, seems good. Yet my gut says 'when in doubt, do nothing.' Why is it so hard?

 

[skyking1]

because it is counter to everything that got you to this situation. I think wringing your hands over a small change in taxes or dividends or is just going to wear out your hands.
Just do it if being that low on cash reserves bothers you. 17K is truly a nothingburger in light of where you are at. I say this as it is a good thing!

 

[Sunset]

So if I sell 40 shares I incur only 1232.98 short term cap gains but also cover a lot of the amount I took out for the car. Then stash 1700 month & dividends. 28% cap gains tax, seems good. Yet my gut says 'when in doubt, do nothing.' Why is it so hard?

You can specify which "lot" of stocks to sell, so you could sell old ones, which are long term capital gain, and depending upon your tax situation could be tax free.

Selling 40 shares of SCHB amounts to only ~$4,360 not a huge amount.

 

[DrRoy]

Now is a good time to sell equities. Why not sell 20 shares?

+1 I often find that splitting the difference is a good way to go. You are always at least half right.

 

[mrfeh]

Personally, I wouldn't trigger a taxable sale just to get the EF back to an arbitrary number, unless I had to.

In the end, do whatever makes sleeping easier.