What funds do you sell in order to balance

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reisner
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What funds do you sell in order to balance

Post by reisner »

The steady rise of the market makes me a little nervous, so I have been rebalancing far more often than usual and trying to stay under our 60% equities allocation. I am probably not alone in this practice. My question is, what are Bogleheads selling lately to balance into bonds? Theoretically I should be selling my Total Stock Market Index, since that has gone up the most, but more than 50% of the balance counts as capital gains. So instead I am selling the FTSE All World fund, because the capital gains on that are only about 20%, and also selling a small and recent tax-sheltered investment in the Small Caps Index. Each of these funds is now a little below 5% of the total portfolio. I suppose I am timing the market a bit here, since the FTSE is not doing as well as the US market--a trend I believe will continue--whereas theoretically I should be buying more of the FTSE.

Is anyone else putting tax planning ahead of investing theory?
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TomatoTomahto
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Re: What funds do you sell in order to balance

Post by TomatoTomahto »

I hope they don't change the BH secret handshake and not tell me the new one for this, but I do my rebalancing with new money as best I can. I also have been using Target Date and Life Strategy funds lately so they do the rebalancing.
I get the FI part but not the RE part of FIRE.
harikaried
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Re: What funds do you sell in order to balance

Post by harikaried »

reisner wrote:also selling a small and recent tax-sheltered investment in the Small Caps Index
Do you have any other equities in tax-sheltered space? Or are those filled up with bonds already?
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BL
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Re: What funds do you sell in order to balance

Post by BL »

Are you retired or are you adding to retirement portfolio? Adding new money where needed would be a good way to rebalance. Are all of your tax-advantaged funds in bonds?

Can you set the TSM to Specific Id so you can sell those lots with least gain? Are you selling funds you want to eventually get rid of, ie., cleaning up or streamlining your portfolio?
Topic Author
reisner
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Re: What funds do you sell in order to balance

Post by reisner »

The Roth is full of bonds, so I have only the Small Caps Index to work with there. And I'm retired; so barring an inheritance or the sale of a screenplay there is no new money to do the rebalancing with. Thanks.

I don't necessarily want to get rid of the Small Caps and FTSE; it's just that those sales create the least tax burden. I do still have about 17K of tax-loss harvest from back in 2009, but I don't care to use it if I don't have to.
livesoft
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Re: What funds do you sell in order to balance

Post by livesoft »

I am giving large-cap US equities with large gains to charity. So I am reducing the things that have done well. I have enough carryover losses that selling at gains is a secondary consideration.
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jebmke
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Re: What funds do you sell in order to balance

Post by jebmke »

Some selling from Value Index. It is the highest yield of my large caps so selling it helps keep the dividends down.
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TravelerMSY
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Re: What funds do you sell in order to balance

Post by TravelerMSY »

I'm not sure why this is a question? Shouldn't you be selling whatever is necessary to get your portfolio back to it's target allocation, even if that means selling a little bit of each category?
harikaried
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Re: What funds do you sell in order to balance

Post by harikaried »

reisner wrote:The Roth is full of bonds, so I have only the Small Caps Index to work with there.
So the Roth is the only tax advantaged space? No IRA or 401k or even 529?
MnD
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Re: What funds do you sell in order to balance

Post by MnD »

reisner wrote:The steady rise of the market makes me a little nervous, so I have been rebalancing far more often than usual
Is that really your IPS?
I rebalance only when rebalancing bands are exceeded. It's all rule based with zero emotion. Rebalancing is a fairly rare event in my world.
What is most over-target is where I would sell from first but of course paying attention to taxes and other transaction costs.
I don't think I've ever had to incur a tax bill for simply rebalancing. Either totally no cost or one or a few $8 trades tops.
You can't get rebalanced using your tax-sheltered accounts?
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.
Topic Author
reisner
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Re: What funds do you sell in order to balance

Post by reisner »

harikaried wrote:
reisner wrote:The Roth is full of bonds, so I have only the Small Caps Index to work with there.
So the Roth is the only tax advantaged space? No IRA or 401k or even 529?
I have a CalPers state, not municipal, pension, SS, and a house on the California Coast. :sharebeer
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