I realize there is no "right answer" to this question, but I am interested in your collective wisdom. I am in early to mid 50s. I will probably retire in a few years. (Best guess = 3 more years). My portfolio is around 63% equities. That is more risk than I want/need to take. If I could snap my fingers and change the allocation, it would be 50/50. But that snap would cost me a lot of money in capital gains tax.
I have been investing all new $$ in fixed income, and selling a little stock. But I have not been doing much stock selling because I don't want to incur the tax.
How do you wise people think about balancing the competing goals of achieving the allocation that you think is right for you against minimizing capital gains taxes?
You can assume I have done the most obvious stuff, like reallocating within my tax deferred accounts, gifting appreciated stock to charity, investing new dollars on the fixed income side.
Would you achieve the allocation you feel comfortable with and damn the tax consequences (as my T&E lawyer says "don't let the tax tail wag the investment dog")? Or live with more risk, for now, and hope that capital gains tax rates might go down - generally or for me? Or do a little bit each year?
Of course, I cannot guess what will happen in the stock market. (Or, I mean, I can guess, but my guess is worthless), but even 50/50 is probably more risk than I need to take. So I am keen to reduce equity exposure. But I don't like the price of doing so.
How you do all think about this issue? Thank you!
I have been investing all new $$ in fixed income, and selling a little stock. But I have not been doing much stock selling because I don't want to incur the tax.
How do you wise people think about balancing the competing goals of achieving the allocation that you think is right for you against minimizing capital gains taxes?
You can assume I have done the most obvious stuff, like reallocating within my tax deferred accounts, gifting appreciated stock to charity, investing new dollars on the fixed income side.
Would you achieve the allocation you feel comfortable with and damn the tax consequences (as my T&E lawyer says "don't let the tax tail wag the investment dog")? Or live with more risk, for now, and hope that capital gains tax rates might go down - generally or for me? Or do a little bit each year?
Of course, I cannot guess what will happen in the stock market. (Or, I mean, I can guess, but my guess is worthless), but even 50/50 is probably more risk than I need to take. So I am keen to reduce equity exposure. But I don't like the price of doing so.
How you do all think about this issue? Thank you!