My target is 70/30 stocks to bonds. Ran my beancount balance last night and I’m sitting at 80/20 after this run-up. Textbook says sell stocks, buy bonds, get back to target. But the sell order sits unsent in my head. It feels like punishing the winners to feed the losers. Plus this is taxable, so selling means a gains bill. Do you rebalance on bands no matter what, just steer with new cash, or let the winners run?
Textbook says sell stocks, buy bonds, get back to target.
That textbook assumes tax-free. In taxable never sell just to rebalance. Steer new cash and redirected dividends to bonds until weight recovers. Do real selling inside IRA or 401k where it costs nothing. But what when drift outruns what new contributions can fix?
1 Like