When you hold funds (not individual stocks) in a TAXED portfolio in different asset classes, (large cap, mid cap, small cap, reits, international, bonds, cash) and you need to rebalance you really can’t do any tax harvesting like you do with individual stocks, where you can sell a losing stock along with a winning stock, and replace both stocks without tax consequences.
With funds, you would be forced to sell that portion of the fund that has increased to replenish the fund that is lagging to try and keep your percentage allocation in tack. This would trigger paying taxes on the amount you have to sell, and increasing your taxes and tax bracket by the amount you sell. Is this a correct analogy? Is there any way around this other than owning individual stocks. What am I missing?
With funds, you would be forced to sell that portion of the fund that has increased to replenish the fund that is lagging to try and keep your percentage allocation in tack. This would trigger paying taxes on the amount you have to sell, and increasing your taxes and tax bracket by the amount you sell. Is this a correct analogy? Is there any way around this other than owning individual stocks. What am I missing?