Keeping your allocation on target is essential — and in taxable accounts, doing it carelessly creates unnecessary taxes.
Rebalancing keeps risk where you intended it. The question in taxable accounts is how to do it without a surprise bill.
Rebalance with cash flow first
Directing new contributions and dividends toward underweight areas often fixes drift without selling anything.
Use tax-advantaged accounts for trades
Where possible, the buying and selling that triggers gains happens inside accounts where it is not taxed.
Harvest losses along the way
When sales are necessary, pairing them with realized losses can keep the net tax cost near zero.
This article is for educational purposes only and is not tax, legal or investment advice. Speak with a licensed professional about your own situation.
