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How is this for tax efficiency? Is rebalancing a taxable event? Or can you rebalance without selling by just redirecting new contributions to the underrepresent
by CapriciousCptl 6y ago
How is this for tax efficiency? Is rebalancing a taxable event? Or can you rebalance without selling by just redirecting new contributions to the underrepresented issues? Over time a buy-and-hold strategy with etfs gives a large compounding bonus since taxes are deferred.
- kmckiern 6y agoWe're exploring several rebalancing models at the moment (calendar rebalancing, constant proportion rebalancing, as well as only rebalancing with new contributions), and trying to understand which folks are more interested in. Which would you be most interested in? Definitely want to mitigate tax burden. Additionally, the direct indexing model does allow for more flexibility around loss-harvesting.
- mkrishnan 6y agoso re-balancing IS a taxable event right?
- eximius 6y agoIt CAN be. It depends how you rebalance. If your target is 50/50 and one stock goes up, you can either sell that stock or buy more of the other one. Only one of those models is a taxable event.
- CapriciousCptl 6y agoOnly rebalancing by using new contributions would be preferred. My use case is re-creating the s and p 500 exclusive of some issues and with regular contributions for retirement.
- aliquotchris 6y agoNice, glad to hear it. We lean new contributions as well.