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Investing Specialists

7 Rebalancing Strategies That Are Tax-Efficient, Too!

Restoring a portfolio to your target allocation has the potential to trigger a tax bill, but it doesn't have to.

You’ve heard the exhortation from me and countless others: Nearly 11 years into stocks’ current rally, most hands-off investors are overdue to prune their appreciated equity holdings.

That’s because inertia has rewarded them with higher equity weightings--and arguably higher risk. A hands-off portfolio that was 60% U.S. equity/40% bond when stocks began to rally in early March 2009 would be 85% equity today. De-risking is especially important for people who are within 10 years of retirement because a too-heavy equity weighting can leave their retirement plans vulnerable if an equity shock occurs early in their retirements.

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