AboutJohn D Smith, CFP Expertise I can answer detailed questions regarding mutual fund investing, retirement planning, education planning and related financial planning/investment issues. I have a B.S. degree in Financial Planning & Counseling. I am also a Certified Financial Planner (CFP) and have performed fee only investment management and financial planning services for the past 11 years.
I have the following dilemma. I am 46 years old and I make a good yearly income which varies a bit every year. Last year because my income went up, my taxes were increased. I had to pay a good amount in April. In Canada because I am an autonomous worker I have to pay my taxes in installments every 3 months. These installments went up to around $50,000 (combined provincial and federal). I make regular deposits into mutual funds for my retirement (these allow me to defer the taxes on this money). I have also $30,000 invested in stocks directly using an internet site. Because of the high taxes, I had to borrow from my credit line to pay the installments and owe now 76,000. The credit line has an interest rate of 2.25% annually. Should I sell these stocks now to start paying my credit line (because of the economic crisis I made a good return on my investment of more or less 25% in 8 months)? In December I will have to pay another 50,000 installment to the taxman and I am not sure if I will have the time to repay all the debt before that. Should I keep the money in the market to wait further gains?
Thanks,
Marcelo
Answer Hi. The correct answer to your question depends on how the investments perform between now and the time you need the $$ to pay back the debt. Since nobody can predict this with a guaranteed degree of accuracy, it is difficult for me to answer this question. However, I will say (and I may be wrong) with the recent market run up there is a good chance that the markets will pull back at some point in time before setting the stage for what will hopefully be continued strength as the world economies get back on track. Again, when and if this happens nobody knows. Sorry I could not offer a specific answer.
