I realize, “Why sell stock to buy a home now?” is a provocative question, but there is substance behind the question. I’m not going to give you financial advice, but I am going to raise the question and let you ponder your major financial decisions. There is some discussion of late by some pretty sharp financial advisers that the markets are due for a 10% to 15% pull back or retracement. Have you noticed that the Dow, the S&P 500, and the NASDAQ are all setting record highs?
Sell Stock to Buy a Home
Jeff Reeves wrote an intriguing article entitled, “5 Reasons to Expect a Correction.” He wrote, “For many reasons, the market appears ripe for a correction. Not a crash, mind you, as the permabears and the bunker crowd would love to see, just a 10% to 15% dip in the broader indexes to allow reality to catch up with Wall Street.” He makes excellent points about why we may see a correction. What does this mean for real estate?
Sell Stock to Buy a Home – Timing
Timing is everything, especially in the stock market. If Jeff Reeves and some others are correct, a 15% percent reduction in a retirement mutual fund could be a large sum of money for many retirees. A two million dollar mutual fund account that is reduced by a 15% pull back translates into a loss of $300,000. You can buy a very nice home in Sequim for that price.
When IPOs are popping for billions of dollars with no earnings, and the media is hyping the 37th record high of the DOW, it’s time to watch out for a downturn, because it feels a little like 2001. Obviously, most retirees would have capital gains or income tax issues if they sold stock to buy a home, but if you knew (and we don’t know) that your mutual fund would go down by the price of a house, it might make accounting sense to pay the tax and buy the house. Hey, I’m just saying. I’m not making any predictions or recommendations here regarding your retirement account or your investments, but the question should I sell stock to buy a home now is a legitimate question.
Last Updated on November 18, 2013 by Chuck Marunde
