one or two of them seem to be doing much better than others. I believe
I would like to sell some of the ones that aren't doing so hot, and
reinvest them into some of the others that are.
I believe this is what is referred to as "re-balancing" my account, is
When people talk about rebalancing their investments they usually do the opposite to what you propose.
- Lets say that you believe that 1/3 of your investments should be in the tech sector, and 1/3 in healthcare, and 1/3 in foreign stocks.
- Now a year later the tech stock are doing great and the foreign stock aren't doing so well. So now the tech/health/foreign split is now 50/30/20.
- If you are going to rebalance you will sell some of the tech shares, and buy more foreign shares, and maybe invest a little more into the health sector.
- This means you are selling high, and buying low.
Now this is different than saying company x has reached a criteria, and I have decided that means I should sell. Rebalancing moves you back to an asset allocation you want to maintain.
The tax implications depend on the time frame you have owned the shares, and the type of account.
Will I have to pay taxes on the money I make off selling the stocks
even if all that money goes into another stock?
I have not heard of a plan that forgives capital gains taxes on the sale of shares because the money is used to buy more shares of another company. I do know that some retirement accounts can defer taxes until retirement, or can even be tax free. But in those cases the tax treatment doesn't depend on what happens to the proceeds as long as they remain in the retirement account.
Then perhaps it would be better not to sell them, but to simply
purchase more of stocks which are doing better, and leave the others
Sometimes people who are going to rebalance, and don't want to deal with tax issues, change how they invest new money. They buy shares in the lower performing sector, and no shares in the better performing sector until they bring the asset allocation back into alignment.
Yes rebalancing can be counter-intuitive.