Many investors are pretty convinced that we’re in a stock market bubble, where share prices are extremely inflated and stocks are incredibly overvalued. I happen to agree.
The problem with stock market bubbles is twofold. First, it’s hard to invest when stock prices are up. Secondly, bubbles eventually burst. That may very well happen in the not-so-distant future, and it surely has a lot of investors worried. Here’s why I’m not sweating an upcoming market crash at all.
If you’re within a year of retirement, it could pay to cash out some stock investments while they’re up, before the bubble bursts. Keep in mind that if you do this in a retirement plan that isn’t tax-advantaged, like an IRA or 401(k), there may be tax implications. Still, paying capital gains could be preferable to suffering losses in your portfolio when you’re on the cusp of leaving the workforce.