Thanks for the polite reception and the responses so far!
bloom2708 wrote: ↑Thu Mar 14, 2019 3:23 pm
1. What are the gains (long/short term) on what you are selling in taxable?
2. What is your new mix of stocks (US to International) and bonds?
If there are not big gains (tax might be owed), then I would just make the moves. No tax consequences in places other than taxable. Frequent trading might apply elsewhere.
Really appreciate the advice! Since there are no tax consequences for changing the Asset Allocation for tax-advantaged accounts, I'll proceed with changing those. However, like you mentioned for the taxable account I'll calculate the taxes on any gains first before changing from my existing asset allocation.
KingRiggs wrote: ↑Thu Mar 14, 2019 3:27 pm
I'm doing this a bit with baby steps. New purchases in taxable account are VXUS. Then I sell my international fund in my 401K and buy either my bond or stock fund, depending on current balances to maintain desired allocation. It'll take a while and I may never get there completely, but it beats selling a bunch of shares in taxable and triggering LTCG.
Glad to hear I'm not the only one doing something like this! When changing asset allocations it seemed like the major options to me were either doing it all at once or incrementally over a period of time. Based on what you're saying it seems like since doing it over a period of time may avoid triggering long term capital gains that's probably the way to go, unless the benefits of changing the asset allocation outweigh the benefits of avoiding taxes (which seems unlikely).
ExitStageLeft wrote: ↑Thu Mar 14, 2019 7:04 pm
Some advice I've seen in various threads is to implement a strategic asset change very deliberately, to ensure you are making the change because it is appropriate to your circumstances and not due to current market conditions. One specific suggestion is to update the IPS to reflect your new allocation but not act on it for six months.
Thank you for saying this because I had to look up IPS to find Investment Policy Statement
. This seems like a very good idea to help with self-discipline, like keeping a budget. I'll have to put one together.
In regards to making sure changing asset allocation is appropriate to my circumstances: it's my understanding the most common or perhaps most important change is factoring in one's age to determine a stocks/bonds balance that's suitable, and updating that appropriately while growing older and reaching retirement. However, since this isn't a change between stocks and bonds but rather two investments that have a similar level of risk, I'm not certain of all the considerations to take into account.
Does anyone have any suggestions for what factors to consider when changing asset allocation between investments with similar level of risk, but different kinds of risk? (Thanks to Vanguard for having an well-written in plain language assessment of the different risks for each fund in their "Plain talk about risk" section!)