r/investing Apr 24, 06:01 PM
When does it make sense to sell and reinvest? Let's say I own a stock with some gains. Is there a mathematical formula to determine if it would be more profitable to sell now, pay LTCG and reinvest at some later date with a slightly lower entry price vs. just holding and paying LTCG in 10 years? Or in other words, is there a specific drawdown % required to offset the immediate taxes and loss of associated compounding in the long run?
I understand taxes shouldn't drive investment strategy, timing the market is bad, etc. I'm just curious from a mathematical standpoint.
EDIT: To clarify, I'm not asking if it's possible to time the market, or if it is a good idea to attempt to do so, I'm well aware that it's not. I'm asking a purely mathematical question regarding how much of a favorable discount one has to receive to offset the tax penalty from selling immediately.
submitted by /u/tloufan2
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