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How to decide what to sell

You own a portfolio of assets, but you need cash for some purpose (downpayment on a house, pay your income taxes, fund some unexpected expenditure, etc.) How do you decide what to sell?

Sell decisions mean taking into consideration a variety of aspects.

1. Growth potential. If you evaluate each stock (or asset or mutual fund) for its potential to increase in value from current price (either as recovery or as growth), how do you rank them? Try to keep those with the best future potential if you can.

2. Do you have any that need to be harvested? Ones that failed to meet your expectations and no longer look attractive? Ones that have had nice gains that may not hold?

3. Tax implications. If in taxable accounts, which will be taxed at long term capital gains rates? If you have losers, you can deduct up to $3K from next years earnings (after deducting from any capital gains).

4. Allocation. Some investors have goals for percentage of assets in various categories such as fixed incomes/equities and sometimes to include sectors like international, real estate, precious metals, etc. Some portfolios also have income goals. Keep these in mind and adjust accordingly.

And if you have nice gains in any stocks, keep in mind you can take some of the profits and perhaps cover your costs by selling some of the shares and keeping a significant position for future growth.

Bottom line is, go through your portfolio, consider all of the aspects, and then rank them. Keep the best. Sell the rest.

Good luck!!

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