*Rebalancing Guide: This calculator helps you determine how to adjust your portfolio according to your target asset allocation. If your portfolio is over-allocated in one category, you can see how much to sell to realign it with your desired values. If it's under-allocated, consider adding to those categories.
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*Tax Loss Harvesting Guide: This calculator helps you decide which underperforming investments can be sold and how much should be sold to offset capital gains taxes. By realizing these losses, you can reduce the taxes owed on gains from rebalancing or other sales.
When deciding which assets to sell at a loss, factors to consider include:
Loss size: Prioritize selling stocks with the largest losses to offset the most gains.
Diversification: Ensure selling a stock doesn't overly concentrate your portfolio in a specific sector or asset class.
Future outlook: Evaluate the stock's potential for recovery. If it's unlikely to recover, it may be worth selling sooner rather than later.
Portfolio alignment: Check if the stock still fits with your long-term investment strategy. If not, selling may be a good move.
Wash sale rule: Be mindful of the wash sale rule—don’t repurchase the same or a “substantially identical” stock or fund within 30 days before or after the sale, or the loss won’t be deductible. (e.g., if you sell an S&P 500 ETF like VOO at a loss, buying another S&P 500 ETF within 30 days could trigger the wash sale rule. Instead, you could buy an ETF tracking a different index, like the Russell 1000, to maintain similar performance without violating the rule. It’s important to choose replacements with a similar risk and return profile to keep your investment strategy on track.)
*Investing Age: This is related to risk tolerance. An investor just starting out has an "Investing Age" of 0 and should be taking more risks because they are young and do not have as many financial responsibilities, such as starting a business or buying a home.
Year of Investing or Investing Age Key:
<5 means more risk: 70% stocks, 5% short-term bonds or money-market funds (1-2 year to mature), 15% medium-term bonds (3-8 year to mature), 10% Real Estate or REIT.
5-8 means slightly less risk: 65% stocks, 10% short-term bonds or money-market funds (1-2 year to mature), 15% medium-term bonds (3-8 year to mature), 10% Real Estate or REIT.
8+ means even less risk: 60% stocks, 10% short-term bonds or money-market funds (1-2 year to mature), 17.5% medium-term bonds (3-8 year to mature), 12.5% Real Estate or REIT.
My Investing Philosophy:
Like many others taking their first steps into adulthood, I became interested in investing when I turned 18. This seemed like a great way to use my money when compared to letting it sit in my bank account, at the mercy of growing inflation.
In addition, my goal is to found a successful business while I am still relatively young. For this to be a possibility, I must have easy access to stable liquid funds.
Therefore, once I have exceeded 8 years of investing (when I am 27) the relative percentage of money invested in stocks (mostly index funds) should be lower so that I can be more confident in the amount of funds that are available to liquify as needed.
In short, this strategy allows me to passively invest in the stock market so that I can focus on my business ventures and, if all goes well, produce some easy access funding from my investments in the end, with the end goal of having my business as my main investment.
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