Question:

I need to take money out of my portfolio soon. How can I make selling assets in this down market as painless as possible?

Answer:

Before you sell, have a plan that considers how transactions in today's market could affect your goals and portfolio long-term. 

If you’re in or near retirement, this includes strategies to help protect against sequence-of-returns risk.

Sequence-of-returns risk: The risk that large losses early in retirement will permanently harm your portfolio's potential growth.

To help mitigate sequence-of-returns risk:

Rebalance your portfolio. You may be able to generate the cash you need just by selling overweight positions and buying underweight ones to get back to your target asset allocation.

Harvest losses. If you have assets in taxable accounts that are now worth less than what you paid for them, you may reduce your tax bill by selling at a loss. 

Prioritize selling assets you've held longer. You'll generally pay a lower tax rate on assets you've held for more than a year.

For more insights visit schwab.com/volatility.

Disclosure:
Diversification and rebalancing a portfolio cannot assure a profit or protect against a loss in any given market environment. Rebalancing may cause investors to incur transaction costs and, when rebalancing a non-retirement account, taxable events may be created that may affect your tax liability. Schwab does not provide tax advice. Clients should consult a professional tax advisor for their tax advice needs.