Help me determine the best way to sell some assets?

[TopHatFox]

Emergency fund is pretty much out. I'll need to sell some assets to make due for now. I'm thinking of getting around 5-10K out to gain some breathing room for finding another job and waiting for an expected 3K tax refund. Here's the battlefield:

Taxable:

11.4K in Vanguard's Total International Equity Fund
18.4K Total Domestic Equity Fund

ROTH IRA:

7.2K in Vanguard's Total Domestic Small-Cap Equity Fund
16.05K in Vanguard's Total Domestic Bond Fund
4.1K in Vanguard's Total Domestic Equity Fund

Bank

2.3K in Checking & Savings
(10K in Credit)

Monthly Expenses:

$1100 for the next 6-12 months, then $300

-------------------------

Here's my plan:

In the ROTH IRA, I'm thinking of selling the Domestic Small Cap Fund and a percentage of Bond Fund to make a 70/30 Three-Fund Portfolio and net around 5-10K of $ to the Bank. That'll give me at least 6 months to get a job I can hold. Last I checked, with Roth IRAs, one can remove contributions with no tax penalties. Selling any assets in the Taxable Accounts would result in capital gains taxes since they've appreciated quite a bit.

Please advise?~

[Mister Imperceptible]

I originally considered withdrawing funds from my Roth IRA for that exact reason- that contributions can be withdrawn without penalty and tax because they have already been taxed. I instead decided to liquidate my Traditional IRA, which only had funds because I had rolled over from a company match. This, too, was potentially stupid, but I was in an anti-establishment mood and it was my way of saying the system wasn’t going to beat me and I was only going to play with house money.

My advice would be to sell from your taxable account, because you are still so young, and you want to realize the benefit of 35+ years of tax-free growth that the Roth IRA provides. The taxes you pay now by realizing capital gains in your taxable account are negligible compared to the taxes you will save in the long run by leaving your Roth IRA untouched.

I could be wrong, I’m far from the most educated person here.

[OTCW]

If you've held the funds in your taxable accounts for more than a year, the gains will be long term, and with your expected income should be taxed at 0%.

[Scott 2]

Roth contributions have an annual cap because the tax benefits are pretty sweet. You generally don't want to drain that account down unless you absolutely have to, because you cannot get the tax advantaged dollars back.

I'd sell from taxable. What to own is a question for someone smarter than me.

[TopHatFox]

Hm, good points. It is harder to get money into the ROTH, the prerequisite being a low income that year and 5.5K max. I could sell the least appreciated lots in the Taxable Accounts that are taxed as long-term gains. Then I could adjust the holdings in the ROTH to create an overall 70/30, Three-Fund allocation. Moving holdings around in Retirement Accounts produces no tax consequence.

[jacob]

And THIS is exactly why it's a good idea to do the taxes by hand, because then you'd know!

[TopHatFox]

And of course, as soon as I decide to sell some assets, stocks decide to plummet 4% -_-

I could wait and run out of Cash. Then, if the downturn continues, I'd need to sell assets at a greater loss.

I could also wait for stocks to rally again before selling?

Advice? I'm thinking of just selling 5-10K today that way if shit does hit the fan, I'll be OK for the next 6-12 months.

[The Old Man]

Long Term Capital Gains rate based on income:
0% $0 - $38,600
15% $38,601 - $425,800

For reasons that others have given you should sell taxable. Sorry, my crystal ball is broken. I am unable to advise as to whether you should sell now or later.

[Fish]

An idea is to use credit cards or a line of credit(*) to manage your short-term financial needs, then pay off any amount borrowed with earned income over the next few months. This would be something to consider if you forecast an asset price recovery, but requires that you go into debt. OTOH, what is the point of having savings if you’re unwilling to use them when needed? Contingency plans for meeting short-term cash needs should be worked out well in advance so that market behavior doesn’t add an emotional component to the decision.

(*) Of course, getting approved for credit usually depends on having a job. Ideally you would have established credit while working your high-salary finance job. Some amount of planning is needed if you want debt to be in your toolbox.