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Rebalancing in Taxable brokerage account

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  • Rebalancing in Taxable brokerage account

    Hi everyone,

    How do you all go about rebalancing your asset allocation for equities in a brokerage account?

    I normally invest X amount per month (split into different asset classes) into my taxable brokerage account and then actually just set it on autopay. I love the convenience of it but then I wonder how to re-balance with mutual funds? I know that I shouldn't sell/rebuy because of taxes that this may incur but was wondering if I should just continue contributing X/month split into different accounts OR should I try to do it manually with contributing to my different assets when one falls out of balance??? What would you all recommend? Have a great week!


  • #2
    You set an initial allocation and contribute according to that allocation. Take stock and rebalance annually. This forces you to sell high and buy low. No need to do it more often unless you really want to.
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


    • #3
      The best way to adjust the balance in a taxable account is to invest in the asset type that is below your target allocation. That would require you to turn off automatic investments, and make a decision when you make the monthly investment.

      Another benefit of doing this is that you will be better able to take advantage of tax loss harvesting when the markets drop.

      Additionally, your overall asset allocation should be applied across all account types. For example, if you want to be 70% stocks, 30% bonds, you could hold 100% stocks in a taxable account, and rebalance to your heart's content without tax implications in a tax deferred or Roth retirement account that contains both stocks and bonds.

      I hope that helps.