I think the percentage of what it is of the portfolio, and how concentrated it is can matter a lot. If the individual stock holdings are 80% of the total portfolio and concentrated in a few stocks, I'd agree that it should be sold to diversify. If it's 10% and diversified across many stocks, perhaps it doesn't matter much either way.
From my perspective - unless you plan to hold the stock until you die, or you expect to be in a zero percent cap gains rate in the future, it is just a matter of timing of when you pay the tax, so I’d probably sell as much at 15% rate as I could afford each year.
I'd expect the percentage to decrease naturally over time due to its dividends being invested in broad market funds, and perhaps new investments.
A larger percentage of the portfolio also makes it more likely that it will need to be sold at some point to pay for future expenses, so a strategy to pay the least amount on it makes sense.
If it's small, perhaps it wouldn't need to be sold during one's lifetime, so one could end up paying unnecessary taxes.
If one wanted to donate to charity or gift to others, then highly appreciated securities could also be used at a lower tax cost.
Personally, I think I'm likely to either have a lot more money than I need, where I can donate highly appreciated securities, or be in a low-income situation at some point when I can sell appreciated securities at a low tax cost to live on. I think it's unlikely that I'll be in a situation where I'd have to pay significant taxes to sell my taxable investments for living expenses.
Statistics: Posted by Lyrrad — Wed Sep 11, 2024 2:12 am — Replies 15 — Views 574