John151 wrote:But as the stock market has risen even further, I've reached the point where I have no more stocks to exchange out of within my tax-advantaged accounts. All of my stocks are now in taxable accounts, and I'm bumping up against the 35% maximum allocation.
I've refrained from investing more in stocks than I have already. My stock dividends are deposited into my money market account, and any "new" money goes into a tax-exempt bond fund. So I don't think I can rebalance out of stocks without selling shares and triggering thousands of dollars in capital gains taxes. Should I bite the tax bullet and rebalance? Or should I let my stock allocation continue to drift upward?
cheese_breath wrote:First, what tax bracket are you in? If you're in the 10% or 15% brackets and sell, your long term capital gains would be taxed at 0%.
gerntz wrote:"Truman Clark, of DFA, examined rebalancing in detail in three papers published online on the DFA site in Fall of 2001. He concluded that, "the proposition that a rebalancing strategy can increase expected return is dubious," "
John151 wrote:I'm a conservative retiree in my sixties....
Perhaps I should add that my pension and my stock dividends are enough to cover my expenses, and I'd still have enough to live on even if stocks dropped dramatically. Also, I'm single and have no children to provide for.
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