Just a little background, I am new to investments and just know the very basics. I own 8 shares of Apple that I bought at $114, the stock grew to around $190 now. So I have made about $500 in profit. Would it be dumb to sell my 8 shares, and then rebuy more shares using my $500 profit money? The only thing bad that I can think of is paying tax on the earning of $500. If it is a good idea to do it, would it be better to do it after the year ends? Thanks!
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Think about it a little - if you sold your shares, you won't be able to buy any more than 8 shares again. If you had a TIME MACHINE - sure - go back in time and buy more shares @ $114. But as it is - you'd just incur transaction costs...
xaznxeclipsex said:Just a little background, I am new to investments and just know the very basics. I own 8 shares of Apple that I bought at $114, the stock grew to around $190 now. So I have made about $500 in profit. Would it be dumb to sell my 8 shares, and then rebuy more shares using my $500 profit money? The only thing bad that I can think of is paying tax on the earning of $500. If it is a good idea to do it, would it be better to do it after the year ends? Thanks!
xaznxeclipsex said:Just a little background, I am new to investments and just know the very basics. I own 8 shares of Apple that I bought at $114, the stock grew to around $190 now. So I have made about $500 in profit. Would it be dumb to sell my 8 shares, and then rebuy more shares using my $500 profit money? The only thing bad that I can think of is paying tax on the earning of $500. If it is a good idea to do it, would it be better to do it after the year ends? Thanks!Huh? If paying tax on your $500 earnings is a bad thing, and paying tax on your $500 earnings is the only consequence of selling/rebuying, then why would you want to do it?
xaznxeclipsex said:Just a little background, I am new to investments and just know the very basics. I own 8 shares of Apple that I bought at $114, the stock grew to around $190 now. So I have made about $500 in profit. Would it be dumb to sell my 8 shares, and then rebuy more shares using my $500 profit money? The only thing bad that I can think of is paying tax on the earning of $500. If it is a good idea to do it, would it be better to do it after the year ends? Thanks!
<Taps sarcasm meter>
You still would only be able to buy 8 shares. Apart from the fact that you will incur short term capital gains taxed at your regular income rate and a possible brokerage fee.
Are you buying more shares of the same stock? Or of a different one?
If you're buying the same stock, this would be an incredibly dumb move, as you'd sell 8 shares at $190, pay the taxes on them, then pay $190 per share for 8 shares again. What exactly do you think you're gaining in that scenario?
If you're buying a different stock, the answer will depend on the future. Do you think the future gains on that stock will be greater than the gains on Apple plus the taxes you pay when you sell? If so, buy it. If not, then don't. Since nobody can predict the future, nobody can tell you whether this will end up being a good move or not.
xaznxeclipsex said:Just a little background, I am new to investments and just know the very basics. I own 8 shares of Apple that I bought at $114, the stock grew to around $190 now. So I have made about $500 in profit. Would it be dumb to sell my 8 shares, and then rebuy more shares using my $500 profit money? The only thing bad that I can think of is paying tax on the earning of $500. If it is a good idea to do it, would it be better to do it after the year ends? Thanks!
xaznxeclipsex said: I guess best bet is to sit on it, or just use more money to buy more...
Not exactly. Do you think that the stock will be worth more in 6 months or less? If less you should sell and not buy any more until 6 months from now. If More you should hold on to what you have and possibly buy more.
Take out the words six months and insert any time frame and you will have your desision point on if to buy or sell a stock.
If I did not once exercise an option instead of selling it, because my calculations showed this was more profitable (when in fact, I ended up losing money instead of gaining because I failed to account for the premium I paid on the original transaction in determining my basis), I'd make fun of the OP.
Congrats on making money on your first foray into the gambling ring known as the Stock Market.
I love Apple. Buy Apple Products. Lots of them. And often.
xaznxeclipsex said:chief100 said:new to the market or new to math?
haha ok ok new to both.
Well I'm glad realized what was wrong. I think you read the thread the other day where someone was talking about selling mutual funds when they are down and purchasing them again so you can claim a loss on the year. But you purchase them to still hold your positions when they go back up.
You have the same idea it would only maximize your taxes instead of minimize them.
Green for you, you may be a new investor, but I am willing to bet no one in this thread has a greater gain on their stock portfolio than you (if this is your only stock). $114 to an intraday high today of $195--- a 71% return. I assume you bought in late May or mid August. That return is equivalent to one of the highest YTD mutual fund returns, including China focused funds.
You may not know shinola about selling, but you're darn good (with a tad bit of luck and courage) at buying.
Did you draft Tom Brady and Adrian Peterson in your FF football?
This is a classic post and you are wise to ask questions. Good luck.
Its not really a silly question, and there ARE times that doing what OP proposed would make sense:
1. He has a low paying Job (or no job) now, but KNOWS that next year he will be raking in the bucks. Paying taxes now (or possibly not having to pay taxes (because of income levels)) would make sense. He then creates a new cost basis by re-buying the shares, thus paying less tax NEXT time he sells (or minimizing losses, if he puts a stop on the share price).
2. He needs cash NOW, but can somehow recover that cash 3, 6 or 9 months from now... and possibly buy 15 shares (if the price of the stock drops).... or he might only be able to buy 2 shares (DSD's DREAM!!!!).
3. Op has read a book or 2, and has decided to diversify... but has no cash.... so he sells HALF his current portfolio (just had to say that), pays the tax and transaction fees, then buys 1 share of google (thus doubling the amount of stocks in his portfolio).... woohoo, not all the eggs in one basket!
I know the above are oversimplifications, but I am sure someone, under the right circumstances, could strongly justify why the OPs idea (or PARTS of his idea) aren't too way out there....
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