Every year, I move money from the disability trust I set up for me and my son (with my own money) to our four registered plans, to maximize each. This year I need to move $20,000.
I am allocated
across all of my investment accounts combined per Canadian Couch Potato (basically 30/30/30 Canada, US, Int'l equities).
US is up, the other two are down.
I asked the trust's bank rep to sell $20,000 worth of the "up" one, and leave the two "down" ones as is.
Rep proposes fancy footwork instead:
Given the expectation for the market for the next year, I'd like to see more in the US fund.
What I'm looking at is tax-loss selling and using the capital gain on the TDB661 to offset the loss on say, the RBF556 (Canadian Index) and NBC839 (Intl Index). Here's my thought:
Sell ALL of the TDB661 to trigger the entire capital GAIN of approximately $1,000. Then buy all but $4,000 of it back.
Sell $10,000 of the RBF556. – this will trigger a capital LOSS of about $2,200
Sell $6,000 of the NBC839 – this will trigger a capital LOSS $225
Capital gains are taxable in the year they are triggered, but can be offset by capital losses. So for you this would mean $1,000 capital gain - $2,425 capital loss = net capital loss of $1425 (approximate). This is NOT taxable and can be carried forward indefinitely to be used against any other capital gains to reduce your taxes in the future.
Your new allocation would the look more like this:
Canadian Equity 41%
Us Equity 30%
International Equity 29%
1. There is enough in the "up" account to fund the full amount needed.
2. I aim for the CCP allocation across
all accounts, such that it's irrelevant (I think) what the balance looks like within any
one of them.
3. When I do so, I actually end up without about 30/30/30 Canada, US, Int'l equity, which is closer to rep's ideal anyway.
What do you think? Does it work just to "sell high" and rebalance across all accounts, or is it for some reason worth doing the fancy footwork the rep is recommending?