I am looking for suggestions, code, or best practices on rebalancing. Specifically, I'm looking for suggestions on how to rebalancing to a global set of asset allocation targets across a set of investment accounts while making an effort to be tax efficient. My specific situation is rebalancing across a Rollover IRA, Roth IRA, and a non-tax advantaged account. Ideally, I would like to avoid putting funds that are high dividend into the the non-tax advantaged account and would like to be aware of capital gains in the non-tax advantaged when rebalancing. Any suggestions?
My current thinking is that this is a linear optimization problem with two constraints: 1) Funds cannot be transferred between accounts and 2) The asset allocation targets are achieved. Has anyone tried to build an algorithm - possibly using Octave or MATLAB or Excel or another software package to do this?
Thanks.
Rebalancing across multiple accounts with tax efficiency
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Re: Rebalancing across multiple accounts with tax efficiency
No algorithm, just a relatively simple Excel spreadsheet. As I add assets to all accounts, I add to tax efficient funds in taxable and then rebalance in the tax deferred. At some point, I will run out of room in tax deferred to do so. At that point, I will rebalance with new contributions and sell for tax efficiency if needed. I have set everything up with specific id cost tracking to allow flexibility.
Re: Rebalancing across multiple accounts with tax efficiency
I dont understand why one would put bonds in the roth, as you would never pay taxes on that money, so wouldnt you want maximum growth from it, with a high stock percentage? Just food for thought.
- tyler_cracker
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Re: Rebalancing across multiple accounts with tax efficiency
http://thefinancebuff.com/stocks-or-bonds-in-roth.htmlsambb wrote:I dont understand why one would put bonds in the roth
discusses some reasons.
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Re: Rebalancing across multiple accounts with tax efficiency
Here's a Wiki page on the subject:
http://www.bogleheads.org/wiki/Asset_al ... e_accounts
http://www.bogleheads.org/wiki/Asset_al ... e_accounts
Variable Percentage Withdrawal (bogleheads.org/wiki/VPW) | One-Fund Portfolio (bogleheads.org/forum/viewtopic.php?t=287967)