Feature: Rebalanced based on a band and within Accounts for portfolio

[mhenke]

Hi,

I setup my yaml file and everything is working. I was wondering if you could add an option in rebalance to also show suggestions for re-balancing within accounts to obtain the desired % for the portfolio as a whole. The account rebalance could use this strategy. https://www.bogleheads.org/wiki/Tax-efficient_fund_placement#Assigning_asset_classes_to_different_accounts.

A caveat would you the dollar limits of what is in each account when using the assignment strategy

command:
lak analyze rebalance -strategy

display:
Class | Actual% | Desired% | Account | Value | Difference

[sarvjeets]

Thanks . Coincidentally I was thinking of something similar, but haven't been able to make up my mind to how best to implement it. There are two possibilities:

1. The tool can help with the optimal allocation to achieve tax-efficient placement of assets. But, there are just too many strategies + it depends on the tax bracket (+ estimate of future returns, expense ratios and time until retirement). I believe this is something that can be added in the library; but the command line interface would become too complicated. I ultimately thought of a simpler but more restrictive idea (explained next).

2. Let's assume all we want to see if how to rebalance within an account, with or without extra cash in that account. Lakshmi already has whatif support to add extra un-allocated cash to an account. We could add a command (either lak analyze rebalance --strategy OR lak analyze allocate; haven't been able to come up with a good name), where the outcome would be to show whatif (hypothetical) allocations to assets that would make all the allocated cash in accounts = 0 AND minimize the relative difference between desired and actual allocation. This can help show how to allocate extra cash within account; OR how to sell assets within account to raise cash (start with unallocated cash in an account as negative) OR how to rebalance within account.

I am currently bending towards implementing (2). Happy to hear your thoughts? My apologies for a hurriedly typed message: If this is not clear, I can create a doc and explain this further with examples.

[sarvjeets]

Update:
Implementing even the simpler version of this feature (suggestion 2) took a lot more work (mathematically) than I ever imagined! I have an implementation ready in branch allocate2.