Well, I Googled and Googled and didn’t come up with that! Thank you.
Thank you for asking! I kept getting some, “black swan,” event in the stock market! 
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My SWAN is a SIL from a culture that would never let their elders sleep on the street. 
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I always am willing to look ignorant.
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I am hoping that I am pointing out the obvious…when you are rebalancing your portfolio outside of your 401K, just pay attention to potential capital gains, especially on stocks that you bought long time ago.
My father bought quite a few stocks that have appreciated 15-20 times of the original price. My mother was tempted to sell some of them when they hit their all time highs. I had to tell her not to touch them. It would be better for her to pass those stocks to us someday so we wouldn’t have to pay capital gains.
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Don’t let the tail wag the dog. I don’t think it’s wise to hold on to an investment purely to avoid taxes.
You don’t know where these stocks will be in 10-20 years, or whatever your time frame is. The companies may not even exist at that point.
There’s nothing wrong with taking some profits IMO.
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Clearly, you would not want to hold these stocks if you thought they were going to lose more if you hold them than the tax hit if you do sell. But, if you have no reason to think they are better or worse than the market as a whole, it might make sense to borrow against an asset (especially if the interest is tax deductible) rather than to sell a seriously appreciated asset.
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Agreed. Those stocks have appreciated in the last 10-20 years.
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It helps to have details about the specific situation. If the idea is to rebalance because news or market events from the past week/month have you worried, then that suggests your previous allocations were not well aligned with your risk tolerance. Ideally you’d structure a portfolio that fits with your risk tolerance, time horizon, and long term financial goals; such that you are okay with maintaining investments when something negative happens and are not trying to time the market.
However, if you do rebalance, then it’s good to think in terms of the full portfolio and corresponding taxes, which often results in prioritizing more tax advantaged assets within portfolio over less tax advantaged assets – great = rebalancing via tax loss harvesting, good = rebalancing within tax advantaged account, bad = rebalance by triggering not low tax bracket capital gains event.
I don’t generally think of selling individual stocks or RSUs as rebalancing portfolio, but one can time such sales to minimize taxes, such as choosing amount to avoid going over tax bracket thresholds and/or choosing to sell in years capital gains or capital losses differ from typical.
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I think the key take-away is to consider what assets to spend down (or in this case selling stock for ‘rebalancing’), and older parents can discuss with their close relatives (like their children) who are often very involved in their health and well-being already.
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Heh – my H does a lot of work preventing black swan events – so when we went to Australia and saw black swans, he made me take many pictures so he could hang one in his office!
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Let’s talk about cash on hand in retirement.
How many months/years worth of cash to cover your regular expenses do you keep available? I had previously seen 1-2 years worth of expenses, but lately I’ve started reading suggestions of four years. Which seems like a lot! Seems like one would subtract SS or pension amounts from that?
How do you decide what amount of available cash lets you SWAN? I’m going to start using that acronym all the time now
@Hoggirl are you asking about liquid assets?
We have an emergency fund, plus maybe a years worth in liquid accounts.
Hmmm. I get that liquid assets can easily be converted to cash - though sometimes with tax consequences.
I mostly mean plain ol’ easily accessible cash.
These suggestions I’m seeing seem to be for people who are heavier into equities so they can ride out any downturns in the market.
Edit: how many months would your emergency fund cover?
I’d get 2-3 CDs laddered so each would provide a year worth of cash.
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My liquid assets are in checking and savings accounts…easily accessible. That’s what I call liquid.
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Oh, okay. I define, “liquid,” more broadly. Anything that can easily be converted to cash. Stocks are liquid to me.
Thanks for clarifying
Well…we don’t own stocks! But they take a song and dance to convert to cash…in my opinion.
Stocks are easy to convert to cash if they have high daily trading volume. The question is not whether one can sell with such stocks, but whether it will be a sale at a gain or a loss…
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I would not consider stocks liquid as you might have to liquidate at a loss.
Treasuries & CDs are liquid, although you could realize a loss if you had to sell before maturity. I keep far more than I should in Treasuries, with redemption dates ranging from four weeks to twenty years.
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