Taxes and Rebalancing

[myrrh]

Well I will soon be getting to the point where I can't rebalance just by adding the annual $5500 to the Roth. So I have a question about rebalancing and taxes.

If you have a Roth or traditional IRA and sell some of one fund and buy another, there are no taxes, right?
If you have a taxable account and sell some of one fund and buy another, assuming you've held the money in the old fund for at least a year, taxes would be the 15% on the profits, right?
How do taxes work with bond funds? Are they the same or would it be better to put bonds in the traditional or Roth IRA?

Thanks, I'm still a newbie at this so appreciate any help.

[Ombud]

Dec 31, 2013 10:59:14 GMT -5 myrrh said:

Well I will soon be getting to the point where I can't rebalance just by adding the annual $5500 to the Roth. So I have a question about rebalancing and taxes.

If you have a Roth or traditional IRA and sell some of one fund and buy another, there are no taxes, right?

Congrats & correct

If you have a taxable account and sell some of one fund and buy another, assuming you've held the money in the old fund for at least a year, taxes would be the 15% on the profits, right?

Generally, yes.

How do taxes work with bond funds? Are they the same or would it be better to put bonds in the traditional or Roth IRA?

Same tax rules but a better question is which investment vehicle is going to serve your purpose long term. I like equities for the retirement account as that has a decades-long view (not tapping for 30+ years) whereas a brokerage account could be accessed yearly [EF]

[bimetalaupt]

Dec 31, 2013 10:59:14 GMT -5 myrrh said:

Well I will soon be getting to the point where I can't rebalance just by adding the annual $5500 to the Roth. So I have a question about rebalancing and taxes.

If you have a Roth or traditional IRA and sell some of one fund and buy another, there are no taxes, right?
If you have a taxable account and sell some of one fund and buy another, assuming you've held the money in the old fund for at least a year, taxes would be the 15% on the profits, right?
How do taxes work with bond funds? Are they the same or would it be better to put bonds in the traditional or Roth IRA?

Thanks, I'm still a newbie at this so appreciate any help.

myrrh,
Yes..Like testing for Value at risk the Expert 50/50 is a trading system...system ..Roth assets are not taxed but deposits are not deductible from income tax..Check with your CPA for details.

Best of luck..rebalancing works great at the Efficient  Market  frontier (asset  allowance)..last number I saw was 63% Stocks/ETF and 37% bond and Bond etf....  Remember bonds Standard Deviation is greater then most realize..only thing about this is the Pearson's correlation resolvent action is negative...like DJIA vs DJUA!!

Just a thought,
BiMetalAuPt

PS: I have moved my  Expert model 50/50 to 63% stock and 37% bonds..30 year

[bimetalaupt]

Dec 31, 2013 16:41:29 GMT -5 Ombud said:

Dec 31, 2013 10:59:14 GMT -5 myrrh said:

Well I will soon be getting to the point where I can't rebalance just by adding the annual $5500 to the Roth. So I have a question about rebalancing and taxes.

If you have a Roth or traditional IRA and sell some of one fund and buy another, there are no taxes, right?

Congrats & correct

If you have a taxable account and sell some of one fund and buy another, assuming you've held the money in the old fund for at least a year, taxes would be the 15% on the profits, right?

Generally, yes.

How do taxes work with bond funds? Are they the same or would it be better to put bonds in the traditional or Roth IRA?

Same tax rules but a better question is which investment vehicle is going to serve your purpose long term. I like equities for the retirement account as that has a decades-long view (not tapping for 30+ years) whereas a brokerage account could be accessed yearly [EF]

Ombud,
Yes and no..Bonds did better from 1999 to 2009!!!  The Expert 50/50 is a trading system..You can work with beta of 2.5 or more and do well if you can buy when ever one else is selling..You may recall the comments I got in 2008-2009.. It is all about the efficient Frontier.  Remember you can also buy calls if you lack free capital.   I did reset my system to 63/37 as the dept of bonds has been changed (lower) by my model.  This is my trading account.. Long term 100% Small Caps have produced about 10% return vs 8% for Blue Chips..Problem is most funds show about 6.5 to 7.5% return for 10 years or more... I bought some Zero's in 1980-1985 area that cost 5% and yielded 15-16% to maturity in my self managed account..Now they are 100% EU Growth trust.  Bet on Black....

Just a thought,
BiMetalAuPt