Which investment would you sell?

[Greg Schuricht]

Hypothetically, lets say someone wanted to liquidate some of their portfolio to finance a vacation rental down payment and furnishings.

Say he needed to raise 100K and had the following options:

Sell mutual funds that have moderate long-term capital gains?  Funds make up 75% of total portfolio, or

Sell position in one particular stock that makes up 25% of entire portfolio, but is mostly unrealized LT capital gains.  This would incur roughly a $25k tax bill.  Advantage to selling this stock would be reduction of total portfolios exposure to one stock - diversification.

Which would you sell?

[Joel Johnson]

Have to start with the disclosure this isn't tax advice and you should sit with your CPA before making a decision, etc...etc. IF it were me, I would sell the individual stock and take the tax bill hit. 25% of an entire portfolio is a little scary to me for exactly the reason you mentioned. I would sit with someone and see if there are specific lots you could sell or maybe get creative on some financing options using the holdings as collateral. But the single stock if we're keeping it simple.