Stock help?

[twinjet]

I once worked for Home Depot as a teen and decided to throw pennies into their employee stock purchase plan.

Eight years later, those pennies matured into a few dollars. Stock price when I worked was holding at $50 a share. Currently $184 each.

I have entered a situation that could be helped with the sale of said stock. It isn't a dire emergency, but would alleviate some stress.

The dividends I earn are pocket change that just gets reinvested anyway. We're talking $20 annually. I have considered selling my stock, seeing how my penny plants have ripened and it is potentially a good time to pick the fruits. However, I could use some help because I didn't know much about stocks when I got into this plan and remain confused by what I read.

Were I to sell my shares, would the taxman just eat up my earnings? Is it unwise to sell, given share prices even in this turbulent economy?

What might you do?

 

[dreamadream99]

You’ll need a broker to sell your shares.

You will be taxed on any increase from the original share prices, as income.

 

[Stewie26]

Long term capital gains tax will be 21% of profit made. ($134 a share of profit) You can also deduct selling cost from profit. Unless you really need the money I would hold. If you are going to use the money to invest in yourself, like flight lessons, then I would sell. Just sayin.

 

[Oddly]

Is that 184$ likely to be as high as it goes?
If you think so, sell now.

Personally I've never got into stock trading...the whole area just seems like gambling, and like gambling, very few people ever come out ahead.

 

[Stewie26]

Is that 184$ likely to be as high as it goes?
If you think so, sell now.

Personally I've never got into stock trading...the whole area just seems like gambling, and like gambling, very few people ever come out ahead.

The stock market over the past 70 years has been two steps forward, then one step back, then two steps forward then one step back and so on. Unlike gambling, if you hold your investments long term without panic selling then you will make money.

 

[TOOL460002]

I typically tell people not to sell, but in your case I would say go for it. You never want to take an early distribution of, say, your 401k (or take a loan out on it). But something like this that isn't earning much in dividends isn't a huge deal.

 

[GregC]

I once worked for Home Depot as a teen and decided to throw pennies into their employee stock purchase plan.

Eight years later, those pennies matured into a few dollars. Stock price when I worked was holding at $50 a share. Currently $184 each.

I have entered a situation that could be helped with the sale of said stock. It isn't a dire emergency, but would alleviate some stress.

The dividends I earn are pocket change that just gets reinvested anyway. We're talking $20 annually. I have considered selling my stock, seeing how my penny plants have ripened and it is potentially a good time to pick the fruits. However, I could use some help because I didn't know much about stocks when I got into this plan and remain confused by what I read.

Were I to sell my shares, would the taxman just eat up my earnings? Is it unwise to sell, given share prices even in this turbulent economy?

What might you do?

Regarding taxes, I have to correct @Stewie26 . The long term capital gains tax you will pay depends on your income bracket.

"The tax rate on most net capital gain is no higher than 15% for most taxpayers. Some or all net capital gain may be taxed at 0% if you're in the 10% or 15% ordinary income tax brackets. However, a 20% tax rate on net capital gain applies to the extent that a taxpayer's taxable income exceeds the thresholds set for the 39.6% ordinary tax rate ($418,400 for single; $470,700 for married filing jointly or qualifying widow(er); $444,550 for head of household, and $235,350 for married filing separately)."
Topic No. 409 Capital Gains and Losses | Internal Revenue Service

As for the stock, an increase from $50 to $184 in just eight years is pretty tremendous and out of the ordinary. Also, we are now more than 9 years into a bull market, which is higher than the average length of time the US market has gone without a downturn. None of that means you should definitely sell the stock, nor can I make a prediction about the market, but maybe there's more downside risk in the short-to-intermediate term than usual.

On the other hand, Home Depot probably isn't going anywhere anytime soon, so if you don't absolutely need the money now, it shouldn't be a bad stock to hold for the very long term. Only you can say for sure what your immediate needs are.

Long term capital gains tax will be 21% of profit made. ($134 a share of profit) You can also deduct selling cost from profit. Unless you really need the money I would hold. If you are going to use the money to invest in yourself, like flight lessons, then I would sell. Just sayin.

 

[roller]

What might you do?

Sit. Don't touch it. Let it ride.

Don't let the last 5-6 months get your selling finger itchy -- it's been the same for many stocks and mutual funds. Bottom line, the market is strong right now and Home Depot stock has looked great lately. See graph below of the performance over the past decade... it's likely to continue.

If your situation truly isn't dire... and if you're not close to the end of your life, this isn't a sell-the-investments-to-fix scenario. Find another way to finance it.

 

[fdeck]

I'm not a financial adviser. In my view, timing a stock sale for maximum profit is impossible. If you are in some kind of situation, such as a big debt that needs to be paid off, then the cost of that debt is probably a lot more than what you might save or earn by timing your stock sale just right. So, sell it and take care of your immediate need.

If you are in a situation, such as needing to buy another bass, and selling this stock would make or break the deal, then you probably can't really afford it in the first place. In that case, holding the stock is just a convenient way of forcing yourself to keep some money in the kitty.

 

[fretter]

If I'm not mistaken, you can also place the stock into a retirement account. That wouldn't help you now but might alleviate some stress in the future.

I wouldn't sell it for a bass, but I would sell it to settle debt (keeping in mind that stock sales are taxed as income). Credit cards, for example have a higher interest rate than most investments, wiping out those gains.

 

[fdeck]

If I'm not mistaken, you can also place the stock into a retirement account. That wouldn't help you now but might alleviate some stress in the future.

I wouldn't sell it for a bass, but I would sell it to settle debt (keeping in mind that stock sales are taxed as income). Credit cards, for example have a higher interest rate than most investments, wiping out those gains.

Indeed, a lot of people overlook the fact that paying off a debt early is the most profitable investment that most of us can make. And it's guaranteed profit.

 

[twinjet]

Thanks everyone. I promise I'm not buying a bass or anything frivolous. This is to take care of school loans, medical expenses, that kind of thing.

 

[fdeck]

Thanks everyone. I promise I'm not buying a bass or anything frivolous. This is to take care of school loans, medical expenses, that kind of thing.

School loans are Evil Debt. Any time you can get rid of Evil Debt, it's a good idea.

 

[sissy kathy]

Sit. Don't touch it. Let it ride.

Don't let the last 5-6 months get your selling finger itchy -- it's been the same for many stocks and mutual funds. Bottom line, the market is strong right now and Home Depot stock has looked great lately. See graph below of the performance over the past decade... it's likely to continue.

If your situation truly isn't dire... and if you're not close to the end of your life, this isn't a sell-the-investments-to-fix scenario. Find another way to finance it.

View attachment 3032713

Notice how the volume is going down as the price is rising, some are settling in for the long haul.

 

[Drgonzonm]

OP, do you work for a company that has a 401K, you might have an option to transfer the hD stock. Other option is to keep, who knows maybe you will want to return to work with hD. Typically there are vesting periods, and it's possible the vesting period does Not reset.

 

[twinjet]

OP, do you work for a company that has a 401K, you might have an option to transfer the hD stock. Other option is to keep, who knows maybe you will want to return to work with hD. Typically there are vesting periods, and it's possible the vesting period does Not reset.

My 401k transferred, but the stock as far as I know doesn't. The company I work for now doesn't trade publicly, but even so it's highly unlikely I return to retail. That was just a short term job to get work experience.

 

[T_Bone_TL]

I'd say hold and let it continue to reinvest, but you do you.

Let me do some math. Current "yield" (the divendend, compared to the stock price - like an interest rate, which we used to get on savings and hardly do now) is 2.20% according to google finance. Which is better than most banks would pay you.

But, YOUR actual return is (roughly, if you've been reinvesting) based on YOUR cost of $50, not $187.35. So you are getting paid 8.24% on the money you actually have in there (again, roughly - your reinvestment as the price rises changes the overall per-share amount you have invested) and THAT only changes if they change the dividend, rather than varying with the stock price. Try getting paid that from a bank.

Here's the point where your investment advisor (which I am not, but I'll say it anyway) says: "Past performance is not an indication of future results" - and it's not, stuff can happen. Companies can go bankrupt and take all your investment down the tubes - it happens. Unlike a bank, your investment is not insured or protected against such events. Companies can cut dividends. But if you figure HD is likely to be around, and likely to remain profitable, it bears looking at what they have done to the dividend in the past:

Dividend History

Which is to raise it consistently. Every time they raise it, your return on investment also goes up. If it's reinvesting, the return goes up faster as you (slowly but painlessly) buy more stock. This is the kind of math that works out well if you can manage to leave it alone and not "slaughter the goose that lays the golden eggs."

Since you evidently only have about 5 shares, selling through a broker would be a huge pain (they like to work in round hundreds) but since you are invested in some sort of employee stock ownership and reinvestment plan they very probably have a low-cost sales option through the plan. So don't head off to a broker without checking first, if you opt to slaughter the goose.

As for "timing the market", it's fundamentally making a blind bet - you'll feel like a fool if it goes to $250 a share, and like a genius if it drops to $100 shortly after your sale. In reality, you simply don't know and it's purely a gamble. Holding on for the dividends (and long-term gains, ignoring short-term setbacks) is also a gamble, but it's usually the safer one. But not always - unfortunately, you can only guess (bet) on when that will be, until after it's over.

ETA: As long as the "qualified dividend" deal exists, qualified dividends (most dividends from real companies in the business of making money - look for it on the 1099) are also federal tax free for most people in the USA (goes partially, then fully away at higher income levels.) Does involve going through a slightly annoying worksheet in the instructions, but makes it even more attractive.

 

[Selta]

Take ~5 lbs of some good beef bones, including knuckle if you can
Also about ~1 lb of flank steak (cut into 1.5" - 2" cubes)
Grab a couple of onions, peel and quarter them
Chop up 2 carrots
Peel 4 cloves of garlic
Peppercorns, whole, to taste (10-20)
A bay leaf or two
Maybe some parsley and some celery

Put the bones, steak cubes, onion, and carrot chunks on a roasting pan, and put in an oven at about 400*F. Roast in there for ~45 minutes, flipping once. You want the bones to brown and a good puddle of sauce.

Take the pan out of the oven. Pull all the meat and veggies off and into your crock pot or stock pot.

Put the pan over two burners and put them on med-low heat. Dump some hot water on the pan, and scrape up all the bits off the bottom. Take this concotion and dump it in the crock or stock pot.

Add everything else to the stock pot. Bring to a simmer, and then lower heat. You want it somewhere around 190*F. Loosely cover the pot, and let it go for 4-6 hours. Don't stir. Every hour or so, grab a large spoon and pull out the fat/scum that is floating on top. Save that stuff in a jar for cooking later (or not, just don't put it down your sink).

When done cooking, very gently (using tongs) grab the large chunks out of your pot. Then, using a fine mesh sieve covered with a couple layers of cheesecloth, drain your stock pot into another pot. Throw the cheesecloths out.

Let that stuff cool for a while, then toss it in the fridge, or use it right away. Enjoy your beef stock.