Key insights
- An investor is considering reallocating their Betterment account from a social impact profile to a technology or core investing profile, facing a $1600 tax hit on $5000 in gains. The decision hinges on whether the potential for higher returns in a different allocation outweighs the immediate tax cost. The investor's age (33) and long-term investment horizon are relevant factors.
Hey everyone. So, I have a thought regarding my Betterment investment account. I've had it for a while and it currently has roughly 18K in it. Just shy. But it's in the "social impact" profile, so the shares are allocated to companies making social impacts in a positive way. However, in this economy, and given the long term nature of the economy, I'm debating on rebalancing into a different profile like "Innovative technology" or their core investing.
The issue here is Betterment estimates a tax hit of roughly 1600 dollars by selling stock. The profits I've made are roughly 5K over the last 9 years.
Now, my thinking is I take the tax hit, use some of the profits to pay the taxes and keep the profit but it's now into a more profitable allocation.
Betterment automatically buys, sells, and rebalances with 90% stock and 10% bond which is as aggressive as I can set it. I'm 33, so these will be long term.
Currently, I have the following setup:
Balance: 17741.81
Gains: 6351.84
Allocations:
ESGU, VBR, DSI, VOT, VBK, VOE - $7960.24 - 44.8%
VOTE - $874.27 - 4.9%
ESML - $704.49 - 3.9%
ESGD, VEA - $4026.04 - 22.6%
ESGE, VWO - $1546.56 - 8.7%
STIP - $107.01 - 0.6%
JMSI, MUB - $1481.00 - 8.3%
EAGG - $188.78 - 1%
SUSC - $319.32 - 1.7%
BNDX - $247.65 - 1.3%
VWOB, EMB - $291.41 - 1.6%
Would it be worth it to tax the tax hit/profit hit to rebalance into something that invests into other betterment profiles?