The contract is signed, and you are mere weeks from closing. Now is the perfect time to think about how you’re going to deploy the assets generated from the sale, right? Not necessarily! It is important not to be “reactionary” in your investment philosophy. “Liquidity events are some of the most critical times in terms of wealth management and long-term planning,” says Joshua Greenberg, SVP and Private Client Advisor at US Trust. Indeed, the last thing you want to do is expose yourself to market timing risk and rush to invest those assets hastily in the quest to avoid having your money sit idle. “The better approach is to think about your overall portfolio in terms of your risk profile and time horizon, and ascertain how to best leverage this liquidity event [i.e. sale of your home] to complement your existing strategy,” he advises. “There are certainly opportunities to invest in the current market, but this is a different market than in the past, and tactical planning is critical to the portfolio construction process.”
The liquidity dilemma: planning for the sale proceeds BEFORE you sell
Between tax consequences, estate planning implications and portfolio re-balancing, there’s a lot more to consider than meets the eye. What this means is that a conversation with a wealth management professional versed in all asset classes is best had when you first list your home, not when it’s sold. Thus you can ensure the best use of those funds via a well-thought out, strategic plan versus a quick reaction when the new assets are received from the sale transaction.
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