How to handle temporary blip in asset allocation?

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Joined: Tue Jun 21, 2011 9:30 am

How to handle temporary blip in asset allocation?

Post by Userdc » Sat Feb 21, 2015 12:14 pm

My current asset allocation is 60/40. One third of the stock allocation is vested but not delivered company stock (I don't include unvested stock in my AA).

When this vested stock is delivered shortly, it will be delivered as stock to a brokerage account and sold on my behalf over a series of days, so there is a ~10 business day period between when I first start selling and when I have access to those funds in my bank account to buy a vanguard equity index fund.

What should I do to avoid skewing my asset allocation for a couple weeks?

1) as the company stock is sold, swap out bond funds for equity funds in multiple 401k and IRA accounts, and then swap them back when I have all of the cash in bank account for Vanguard purchases.

2) as the company stock is sold, sell muni funds in taxable account to buy index funds, and then buy muni funds back with cash proceeds. This will incur small amount of capital gains which will eat into my ample carryover losses from prior TLHing.

3) don't sweat it - it's a short amount of time in the grand scheme of things, and you are essentially equally likely to benefit or be harmed by having some of your AA out of equities for a short period of time.

I'm leaning towards #3 because I hate incurring unnecessary capital gains and I don't want to coordinate juggling all of those funds in my tax-deferred account.

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steve roy
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Joined: Thu May 13, 2010 5:16 pm

Re: How to handle temporary blip in asset allocation?

Post by steve roy » Sat Feb 21, 2015 12:22 pm

I'm with you on number 3.

It's also the simplest. And as I travel down life's highway, I find I like and enjoy simple.

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