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    Default Exchange traded funds

    My stock portfolio is mostly in securities. It's not diversified at all, it's very overweighted in one or two sectors, and mid-cap stocks. I'm looking into shaving off money from each individual stock and buying into an ETF. I'm facing substantial capital gains, so of course I'll have to pay taxes on them. Should I use income to pay the taxes, as opposed to using the money I liquefy?

    I don't really have a good financial vocabulary yet, so I can clarify something if I need to. I'm just learning. Can anyone point me towards something that explains the benefits/drawbacks of ETFs? Thanks.
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    Default related comments here

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    Default Re: Exchange traded funds

    Quote Originally Posted by Samba View Post
    My stock portfolio is mostly in securities. It's not diversified at all, it's very overweighted in one or two sectors, and mid-cap stocks. I'm looking into shaving off money from each individual stock and buying into an ETF. I'm facing substantial capital gains, so of course I'll have to pay taxes on them. Should I use income to pay the taxes, as opposed to using the money I liquefy?

    I don't really have a good financial vocabulary yet, so I can clarify something if I need to. I'm just learning. Can anyone point me towards something that explains the benefits/drawbacks of ETFs? Thanks.
    Are you facing Long Term Capital Gains or Short Term?

    If it is Long Term, better to bite the bullet now before the tree-hugging-left-wing-liberals elect a Socialist Government.

    If it is short term, instead of selling the stock right now, use zero cost option strategies around your individual stocks. Eg: If you have an Apple Stock, Every Month you can sell P + 15 Call and Buy a P - 15 Put
    Eg: You sell a Jun $190 Call and Buy $160 Put. (Costs you around $0) This way you are somewhat hedged. Repeat every month till you roll into Long Term Gains period.

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    Default Re: Exchange traded funds

    Thanks Melonie. I knew you'd come through with a link.

    xanfiles1, I'm definitely going to sell the stock before the capital gains tax rate is increased (if it does increase).
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    Default Re: Exchange traded funds

    I'm definitely going to sell the stock before the capital gains tax rate is increased (if it does increase).
    You won't be alone in this regard. If it looks probable that Obama will be the nominee, it's also probable that a whole lot of investors will NOT wait around for the actual election results before selling off their US stocks sitting on sizeable capital gains. It is equally probable that a whole lot of sellers versus few new buyers will precipitate major drops in the value of US stocks ... potentially creating a 'race for the exits' situation that many investors wish to avoid getting trapped in.

    However, the same Obama tax increase scenario appears to be creating an increase in demand for tax free Muni Bonds. See for Vanguard's low minimum buy-in tax exempt funds. Of course you can avoid getting nicked the 1% typical fund management fee by directly purchasing the bonds themselves, but then the minimum buy-in jumps to $50k or more. There are also a handful of muni bond ETF's now available too, such as , which bypass the 1% typical mutual fund management fee of an actively managed mutual fund but simply tracks a bond index (meaning that theoretical higher gains due to active management will not be realized).

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