portfolio-rebalancing

name	portfolio-rebalancing
description	Tax-aware portfolio rebalancing — asset allocation, registered account placement, tax-efficient transitions
triggers	["rebalance","allocation","portfolio review","asset allocation","overweight","underweight","drift","diversification"]
tier	core
dependencies	["tax-optimization","financial-planning"]

Portfolio Rebalancing

Overview

Periodic portfolio review and rebalancing with full tax awareness. Every rebalance decision considers: which account holds the asset, what the tax cost of selling is, and whether the drift is large enough to justify the transaction.

When to Use

• Quarterly portfolio review
• When a single position exceeds target allocation by >5%
• When CC asks about asset allocation
• After significant market moves
• When new capital is available to invest

The Process

Phase 1: Current State Assessment

1. Pull all holdings across accounts:
   • Kraken (crypto — non-registered)
   • OANDA (gold/forex — non-registered)
   • TFSA (if investments held)
   • RRSP (if investments held)
   • FHSA (if opened and invested)
2. Calculate total portfolio value
3. Calculate current allocation percentages
4. Compare to target allocation

Phase 2: Tax-Efficient Account Placement

Which assets belong in which accounts:

Asset Type	Best Account	Why
High-growth crypto	TFSA	Tax-free gains on highest-growth assets
Crypto ETFs	TFSA	Tax-free, no ACB tracking needed
US dividend stocks	RRSP	0% US withholding (Article XXI treaty)
Canadian dividend stocks	Non-registered	Enhanced dividend tax credit
Bonds / GICs	RRSP	Interest taxed at full rate — shelter it
REITs	TFSA or RRSP	Distributions are income, not eligible dividends
Gold ETFs	TFSA	Capital gains tax-free
High-growth equities	TFSA	Maximize tax-free room for highest appreciation
International stocks	Non-registered	Foreign tax credit available

Phase 3: Rebalance Decision

For each position that exceeds drift threshold:

1. Sell in tax-free account (TFSA/FHSA)? Do it — no tax consequences
2. Sell in non-registered? Calculate capital gain/loss
   • If gain: consider tax cost vs benefit of rebalancing
   • If loss: bonus — harvest the loss AND rebalance
3. Redirect new contributions? Often better than selling — no transaction costs or tax

Phase 4: Execution

1. Prioritize rebalancing with new money (no tax impact)
2. If selling required: execute in tax-free accounts first
3. If selling in non-registered: check superficial loss rule
4. Record all transactions for tax tracking
5. Update ACB records

Phase 5: Documentation

1. Record new allocation vs target
2. Note rationale for any deviations from target
3. Calculate tax cost of rebalancing (if any)
4. Set next review date

CC's Target Allocation (Current Stage — Aggressive Growth)

This is a starting framework — adjust as income and risk tolerance evolve.

Asset Class	Target	Account
Crypto (BTC/ETH/SOL)	30-40%	Kraken (non-reg) + TFSA (via ETFs)
Gold / Precious Metals	10-15%	OANDA + TFSA (via ETFs)
Growth Equities	20-30%	TFSA + RRSP
Cash / Emergency Fund	10-15%	HISA (RBC/EQ Bank)
FHSA	Max ($8K/year)	Balanced growth fund
Alternative (future)	0-10%	Various

Key Rules

• Rebalance with NEW MONEY first (zero tax cost)
• Never rebalance just to rebalance — drift must exceed 5% threshold
• Tax-loss harvesting during rebalance is a bonus, not a goal
• Keep TFSA for highest-growth assets (maximize tax-free compounding)
• Keep RRSP for US dividend stocks (treaty benefit) and bonds (shelter interest)
• Non-registered: Canadian dividends (DTC benefit) and international (FTC)

Document References

• finance/advisor.py — FinancialAdvisor.suggest_allocation()
• ATLAS_TAX_STRATEGY.md — Account placement optimization
• ATLAS_INCOME_SCALING_PLAYBOOK.md — Allocation by income tier
• ATLAS_ALTERNATIVE_INVESTMENTS.md — Alternative asset options

Internal References

• [[anthropic-us-version]] — Anthropic's US-framing methodology, preserved for the SMB-product future (US clients)