Q: Hello Peter
I have a policy that no individual security should exceed 5% of the value of my total portfolio. Normally when a stock reaches 5.5% I trim it back to 5% and invest the proceeds in the fixed income portion of my portfolio to maintain a 30% fixed income, 70% equity allocation. Over the past couple of years I have needed to trim shares of TD, RY, BNS, BCE, T, TRP and CU as they have all exceeded the 5% threshold. These stocks are held in an open account, so capital gain taxes must be paid on the dispositions. I know that the value of my portfolio would currently be higher if I did not follow this policy. Is this policy flawed? Should I just let the winners run?
Thanks David
I have a policy that no individual security should exceed 5% of the value of my total portfolio. Normally when a stock reaches 5.5% I trim it back to 5% and invest the proceeds in the fixed income portion of my portfolio to maintain a 30% fixed income, 70% equity allocation. Over the past couple of years I have needed to trim shares of TD, RY, BNS, BCE, T, TRP and CU as they have all exceeded the 5% threshold. These stocks are held in an open account, so capital gain taxes must be paid on the dispositions. I know that the value of my portfolio would currently be higher if I did not follow this policy. Is this policy flawed? Should I just let the winners run?
Thanks David