Rebalancing
Hi Terry,
I want to rebalance my portfolio to a 40/60 mix. I am 74 years old. A few years ago, I bought stock in Nvidia. I have always invested in mutual funds. ) Now my shares of Nvidia are worth 20% of my equity portion currently before rebalancing. So I want to keep Nvidia because I believe in the company and the impact AI will have on all aspects of our future. But not sure if I should take that out of my equity portion and just view it as a separate account which would increase my over all equity percent or should I include it in the equity portion. I do have a stop/ loss in place. Any help would be appreciated. Thank you,
.
but I am unsure how to rebalance.
Terry Says
Whew — that is a tough question. And I’m assuming this is after-tax (not IRA) money, so any sales will be subject to capital gains taxes.
I don’t know enough about your situation to know whether you will need to spend this money during your lifetime. If not, when you die, your heirs will get a “step-up” in basis — meaning their new cost basis is the value on the date of your death. Thus, those gains might not be subject to ANY taxes if you die owning those shares.
And, I’m not sure what you want to do with the other 60% of your portfolio. You could lose money in bonds, if interest rates move higher. I think a wiser choice would be to take 25% and put it in “chicken money” such as short-term Tbills (low yields, but no losses).
It’s difficult to advise without knowing your full financial situation. Maybe this is the perfect time to connect with a fee-only, FIDUCIARY financial advisor who is not collecting commissions on transactions.
Read this: https://www.terrysavage.com/pam-krueger-wealthramp/
