First big sell off, what to consider?
I contacted fidelity about a question, a rep responded with an email asking when I good time to talk would be, I told the rep, never heard from said rep again. So who else better to turn to than the tried and true Blind community, ha. I went to make my first, what I'd consider "big" stock sell off the other day. About 60k. Before confirming the order I was prompted with a message I hadn't seen before making sure I've assigned my "tax lots" the way I'd like them. This was the first I'd heard of assigning tax lots, got me wondering what other considerations I'm unaware of that I should be heeding for this kind of order. I have enough money working for me in the market, skimming some off the top to put in a high yield or something, some "opportunistic" funds. I'm obviously aware of the tax hit on the gains, are there any other surprises waiting to pounce on a novice investor when cashing out worth knowing? Thanks Fideli...er, Blind
It's simple. Don't sell.
You have more faith in the market than I lol. The way I'm looking at it, I'm in my early 30s and feel like the biggest "guarantee" I can count on is that the market will crash/a bubble will pop to some degree (if not multiple times) at some point before I retire. Positioning myself to be less of a victim and more of an opportunist when it does.
Time in the market beats timing the market. You are wasting your youth.
Fidelity automatically sells your oldest lots first I think to make sure you get long term capital gains if possible
You're already positioned to take advantage of a down turn just by dollar cost averaging. Only pull money out to chase higher yield, but don't do it without a plan.
These advises are horrible Selling stock to rebalance as financial circumstances change is a valid financial strategy. Op, tax lot just allows you to decide what lots to sell. For most people FIFO is good. For some of us who over-strategize this crap we may choose alternate. I might LIFO a tax lot to diminish my return as long as it’s still LTCG viable. There are no other land mines beyond short term vs long term capital gains.
Did you select the lots you wanted to sell? Are you only selling stock lots you've held long term or short term lots as well?
I tried to select/bundle up the shares with lowest gains. (Which is the first time I had done that). Is that all the "tax lot" prompt was alerting me of? So I likely have considered it and just not privy to the nomenclature.
You need to look at lot classification. Long term vs short term. Should be very easy to see on Fidelity.