Cashing in invenstments at a loss..

[Mrculex99]

I couldn't figure out where to post this, so I figured here. I'm looking for a Suze Ormon. :) I won't use hard numbers, and try to work with percentages instead. Quick background on my situation is that I'm looking to purchase a house in 1-3 months. I saved and can afford a down payment without much issue. My problem here though is where should I draw from?

My regular savings account has about x1.5 to x2 what I need for the down payment, but should any life emergency or unexpected big expense bring its head, I'd be a little hard pressed. I sent this account automatic transfers from checking to savings each month of a flat amount.

In stocks, I estimate that I sold all of it now, I have about 3/4 of what the down payment would be for a house. I've taken fairly heavy losses for the year, as I'm sure everyone has. This was my play money that I hoped to cash in to not touch my rainy day savings above. Basically, I've been averaging down on stocks that I liked. I'm still down ~15-20% in VZ, ADM, GLW, and DE, just for example. I'm not really looking for advice on these specific stocks, just showing that I've taken a lot of pain.

I have a Roth IRA of mutual funds that I've been contributing at the max for the past 3-4 years. That is also down technically only 5% of what I've put in, but ~17% factoring in earnings over the years.

Question is: I would hate to have end up buying high and selling low. My goal a year ago was to mainly draw from all three for the down payment and subsequent housing costs. What do you all do when facing life altering capital expenditures and stocks in the red?

[aiki14]

I couldn't figure out where to post this, so I figured here. I'm looking for a Suze Ormon. :) I won't use hard numbers, and try to work with percentages instead. Quick background on my situation is that I'm looking to purchase a house in 1-3 months. I saved and can afford a down payment without much issue. My problem here though is where should I draw from?

My regular savings account has about x1.5 to x2 what I need for the down payment, but should any life emergency or unexpected big expense bring its head, I'd be a little hard pressed. I sent this account automatic transfers from checking to savings each month of a flat amount.

In stocks, I estimate that I sold all of it now, I have about 3/4 of what the down payment would be for a house. I've taken fairly heavy losses for the year, as I'm sure everyone has. This was my play money that I hoped to cash in to not touch my rainy day savings above. Basically, I've been averaging down on stocks that I liked. I'm still down ~15-20% in VZ, ADM, GLW, and DE, just for example. I'm not really looking for advice on these specific stocks, just showing that I've taken a lot of pain.

I have a Roth IRA of mutual funds that I've been contributing at the max for the past 3-4 years. That is also down technically only 5% of what I've put in, but ~17% factoring in earnings over the years.

Question is: I would hate to have end up buying high and selling low. My goal a year ago was to mainly draw from all three for the down payment and subsequent housing costs. What do you all do when facing life altering capital expenditures and stocks in the red?

I would have liquid assets of at least 3 months income (6 is better), if you use your savings and are left without that sell some of your stocks and write off the losses on your taxes to offset a little. If it's your first home, use 10K of your IRA because it's penalty free.

[Florida]

To really give the best advice, we would need additional information, like your age, where you are looking to buy the home, amount of money in savings, etc. but obviously, this is a little too personal to share on a public forum. So the following is basic advice, that would fit most situations in my opinion.

First, if you are not in a position to put at least 25% to 30% or more down on the purchase, don't even think about it at this time. We certainly don't need 1 more home going into foreclosure in a year or 18 months if something was to happen. You may not think this is possible, but with home prices still going down in much of the country, a 10% decrease in value plus commissions, closing costs, etc. would eat up a down payment of less than this in a hurry if you had to sell quickly.

Sell all of your stocks first to apply to the down payment, then take the balance from savings. It appears that you have had a tough year with the stocks based on your statement, and you certainly don't need the balance of your overall portfolio to suffer further losses. While you may have some good stocks in there, you have no guarantee that they will not continue down, while your savings will remain constant with maybe a little interest. You don't need 1 more thing to worry about as you move forward with your purchase.

DON'T TOUCH THE ROTH!!! Unless you are having to sell your blood at the local plasma center to pay for food, leave this money alone. When you get to be an old fart like me, you will be glad you did. People have the best intentions when they "borrow" money from retirement accounts to pay it back quickly, but the truth is, few ever do. $10K taken from your retirement account now, (depending on your age), could results in 10's of thousands of dollars less in the account when you are ready to retire.

As a side note, please reconsider the practice of "averaging down" on your stocks. In fact, you should only add to winning positions, and you should be selling losers quickly. Granted, in the past the stock market has historically came back from these pullbacks, but that is not true of individual stocks. How many people do you think found themselves wiped out after averaging down on Bear Sterns, FNM, FRE, LEH etc. The same fate could happen to your stock holdings. I have found the best way is to set a firm stop on any stock, and exit if it falls below that. Should the stock turn around, you will have the opportunity to get back in if you want to.

Good luck with your decision, regardless of what you decide to do. Perhaps you have some trusted friends or family that you could discuss the specifics of the situation with, most times, 2 or 3 heads are better than one.