400k portfolio need to liquidate 75k to pay debt and bills and buy a new car?

Question

how much am i going to pay in taxes and does anyone else have some suggestions im 25

Answer 1

If the debt is delinquent at all, consider debt settlement; could save you up to 50% of what you owe.

Answer 2

long term cap gains are low but you can also pick what securities you want to sell. You only pay taxes on your profit. So if you have some dogs in your portfolio that you feel comfortable selling, your tax bill may be small to none.

If you have credit and can refinance your debt (since you have much greater assets than debt), you could reallocate some or all of your portfolio (again, I'm not sure how much you have in gains) to higher yielding equities (like utility stocks) that could generate around 8 - 9% a year (before income taxes). For simple math, if you had 400k in utility or other high dividend yielding stocks that offered 7% a year (pre-tax), that portfolio would be paying you 28,000 a year (or just over 1/3 of your debt).

Accordingly, if you were able to get your 75k debt in refinanced at 8% or something (6k in interest a year), you would be able to pay off your 75k debt in 3.5 years.

I don't know what kind of car you are thinking about but the concept is the same (if you can finance the car, your portfolio can continue to make money for you).

Good luck

Answer 3

Don't buy a new car, buy used. Read "The Millionaire Next Door" and anything by Suze Orman to learn how to manage your finances.

If you're 25 and you have $75,000 in a 401K, if you're making 8% interest, that $75,000 will become $1.2 million by age 61 (The Rule of 72), while that car will be a junker in ten years. Your choice.

Answer 4

if you only liquidate investments you've held for at least 1 year you will pay 15% of the profit. You could estimate it. If you started out with 200K and it grew to 400K, then you'd pay 15% of the 50% profit, so about 7.5% of however much you sell.