I like target date funds due to their simplicity. However, one disadvantage is that the stocks and bonds are now combined together in one fund and the flexibility to sell one of them individually is lost e.g., if market is very high, I'd like to sell some stocks while keeping the bonds intact.
Because of this I am thinking of doing it myself and simulating a target date fund by yearly rebalancing my stocks and bonds (option 1). However, in a taxable non-retirement account, the rebalancing (sell some stocks to buy bonds) will generate some income (assuming stocks make a profit) on which I will have to pay taxes. What if I had instead invested in a target date fund (option 2)? Would I pay the same tax indirectly or is there a genuine tax advantage to be had in this scenario?