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Thursday, November 29, 2007

Supercalifragilisticexpialidocious

As I look at 2 of my stocks in my Sharebuilder account, I see that they are now worth more then the sale commissions. Even though they are the 2 stocks that I am most interested in keeping and building, I am considering selling the full shares to help pay off one of my debts.

In so doing I will keep the partial shares, which would allow me to remain a share holder in both companies. Once I can again be an investor I would be able to build those shares. In addition, since I have partial shares the dividend reinvestment part of the plan will help rebuild them in the meantime.

The downside is an additional tax liability in addition to what I already owe the IRS (because of a stock sale). Would it really be wise to sell these for the $200?

What do you all think? Let me hear your opinions.

Posted by Kevin Surbaugh at 11/29/2007 09:55:00 AM
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3 comments:

  1. It fully depends on how much your tax liability will be. Even if you just estimate, will the profit you get off the shares be more than the commission + the liability? And if it is, will it be worth it enough to you to sell at this time?
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  2. The sell of the 2 stocks will be about $200 and my current IRS liability is about $3,000.
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  3. it depends on how much interest you're paying on debt. i really doubt the stock will appreciate more than the debt! i bet your capital appreciation tax rate is 10% and your dividend rate is 5%. so what's the rate on the debt you'd be paying off? 20%? unless you have reason to believe the stock will appreciate more than 20% in the next year, sell it and pay the debt. you can keep aside about 10% of the proceeds (sell value minus buy value) to cover the taxes for it. paying debt is a great investment, unless the RATE is less than what you can earn in the market. (yep, I still have debt at 0%, on money earning 4.5%.)
    ReplyDelete

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