Should I use money in a mutual fund to fix my basement?

“I have some money in a mutual account that I transferred from an IRA account. I want to use some of this money to fix my basement. Should I?”

Submitted by Pauline B.

I’m going to have to make a few assumptions here to respond to your question.

It seems you transferred funds from an IRA into a mutual fund (taxable) account. To do this, you may have faced tax consequences if you weren’t at least 59½ years old (the penalty-free withdrawal age). If your mutual fund is not an IRA or other tax-advantaged account, the only decision you need to make is whether basement renovation is your financial priority.

There is no “right” answer about what you should or should not do with your money. The real question is, what is your overall plan for your resources? What impact will using the money have and what would happen if you don’t fix the basement? When my coaching clients are faced with a decision I ask them to do the following:

  • Write the pros and cons of the idea/change (in your case, fixing the basement).
  • Write the pros and cons of doing nothing (in your case, keeping the money in your account).

If your cash flow is good and you don’t have other financial concerns, which of the options is more satisfying for you? Once you make that decision, establish a budget for the repairs and decide how much you want to keep in the mutual fund.

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