In our case, our taxable account was also held for the long term. If you plan to use part of your taxable for the short term, then you could separate short term needs from long term needs and then look at the overall risk of long term portfolio separate from the risk of the short term portfolio.Won't this mean that the accounts will have diverging risk exposure? For example, if equities go up in IRA, then the IRA will sell equities and buy bonds. Since it's not efficient to hold bonds in taxable, taxable will be 100% equity and thus exposed to more risk.And of course when looking at all assets across all accounts, it's often easiest to just to do the rebalancing in tax advantaged accounts since that won't incur any tax.Context: taxable account
If I sell the asset up to buy the asset down, I incur an early capital gains tax. Isn't the objective of taxable accounts to defer gains as long as possible, otherwise you forego the compound growth.
Since the IRA is being held for long term it intuitively makes more sense for the IRA to be the account with the higher risk exposure. Taxable accounts can be accessed at any time in the near term so they need to have less risk.
Statistics: Posted by lazynovice — Tue Feb 06, 2024 12:08 pm — Replies 40 — Views 3113