Rebalancing, Best Tools, Taxes

[OK_Kathy]

Hello everyone, newbie here!
I just completed the crypto investment course on Udemi, and found idea of rebalancing very interesting, but have a few questions:
- Does it really worth it to do rebalancing as often as possible (as it was recommended)? I understand that each selling is a taxable event, so when you rebalance - this counts towards your capital gains, which, which would be the short term if you do it often (in the course was recommended to do it every day). Also you pay commission every time you buy/sell. So I'm a little skeptical on that advice. The course was a little outdated (5 y.o), so maybe at that time there was no transaction fees on exchanges and no regulations about taxes? What is the best practice now?
- What is the most popular/trusted tool for automatic rebalancing? In the course was highly recommended https://www.shrimpy.io/, but I was lucky enough to join crypto-world accurate a month after this platform discontinued its work. What is its current alternative?
-What is a best platform for tax calculations and filing? The one that would automatically consolidate all your assets on different wallets/exchanges, track transaction fees, transfer fees, staking, lending etc. and calculate the gains/losses?

Preferably free or not expensive tools.
Thank you in advance!

[Faisal2202]

- Does it really worth it to do rebalancing as often as possible (as it was recommended)? I understand that each selling is a taxable event, so when you rebalance - this counts towards your capital gains, which, which would be the short term if you do it often (in the course was recommended to do it every day).

I think we don't need to transfer money from Wallet "X" to Exchange "Y" if we want to do daily rebalancing. Means if your portfolio let's say you have a aim to maintain a portfolio of $30k but the amount of BTC and ETH you have, making them lesser so you have to maintain the percentage. Let's say you invested 50% in BTC and 50% in ETH it means you invested $15k in BTC and %15k in ETH and due to the price going up and down your total investment of ($30k) might be increasing or decreasing and to maintain your investment you make changes means you do rebalancing. And if you really wanted to do rebalancing on the daily basis then why not depositing some extra money in your exchange because once you put some extra money like $2k along with $30k to rebalance your portfolio then the tax and fee will be lower as you are making only one transaction instead of many.
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Also you pay commission every time you buy/sell. So I'm a little skeptical on that advice. The course was a little outdated (5 y.o), so maybe at that time there was no transaction fees on exchanges and no regulations about taxes? What is the best practice now?

You asked it is worth to rebalance the sheet daily then the answer depends on your mindset as I think if you do not know the answer to this question then you might have wasted your time on that course. No offense.

Transaction fee are there from the start it is not just something started few year ago. So, even the course is 5 years old there were transaction fee too.
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- What is the most popular/trusted tool for automatic rebalancing? In the course was highly recommended https://www.shrimpy.io/, but I was lucky enough to join crypto-world accurate a month after this platform discontinued its work. What is its current alternative?

Automatic rebalancing depends on the platform you are going to chose like it might be centralized and decentralized. Hmm, For your convenience I am mentioning some CEXs but you might find DEXs too. Because many members here hate CEXs and once they see my recommendations they will also mention DEXs. 

• https://www.hodlbot.io/
• https://www.cobo.com/
• https://3commas.io/
• https://quadency.com/
• Coinbase
• https://www.binance.com/en/support/faq/what-is-rebalancing-bot-and-frequently-asked-questions-29bbbd2e7fc24085be7a8a7d02779457

-What is a best platform for tax calculations and filing? The one that would automatically consolidate all your assets on different wallets/exchanges, track transaction fees, transfer fees, staking, lending etc. and calculate the gains/losses?

• https://cointracking.info/
• https://www.zenledger.io/
• https://www.accointing.com/ --> less traffic means it might be old but DYOR
• https://tokentax.co/  --> less traffic means it might be old but DYOR

[OK_Kathy]

And if you really wanted to do rebalancing on the daily basis then why not depositing some extra money in your exchange because once you put some extra money like $2k along with $30k to rebalance your portfolio then the tax and fee will be lower as you are making only one transaction instead of many.

This is a great suggestion, thank you! Initially this was my natural approach - to contribute some additional money every month, and try to maintain the desired balance. However, the course emphasized that frequent rebalancing can capture additional profits from market fluctuations on top of extra investments, even without adding more funds. They used the shrimpy.io app, which automatically rebalances as often as you want, even every hour. I understand the concept, but got concerned that the extra profit might be offset by increased taxes and transaction fees. Just wanted to hear from people's actual experiences. I believe there are established best practices by now, although it's challenging to find reliable information.

You asked it is worth to rebalance the sheet daily then the answer depends on your mindset as I think if you do not know the answer to this question then you might have wasted your time on that course. No offense.

I'm not sure what you mean I grasp the benefits of rebalancing; I simply questioned the suggested frequency. The course didn't delve into taxes or fees at all. Presumably, these expenses are negligible when dealing with larger volumes. I'm just starting out with a modest deposit, and my mindset is still evolving. Thus, I had some uncertainties. Traders might not be concerned due to their high transaction volumes anyway, but I'm aiming for long-term growth. I hope I haven't squandered my time on this course; for a $15 investment, it wasn't bad at all. We all have to start somewhere

Thank you very much for your reply! I will definitely DMOR on the recommended tools!

[bitmover]

Hello everyone, newbie here!
I just completed the crypto investment course on Udemi, and found idea of rebalancing very interesting, but have a few questions:
- Does it really worth it to do rebalancing as often as possible (as it was recommended)? I understand that each selling is a taxable event, so when you rebalance - this counts towards your capital gains, which, which would be the short term if you do it often (in the course was recommended to do it every day).

I consider this a terrible advice. And you know that it is wrong. I can see in your commentary that you know this is irrational.

You will lose money in tax gains.
Additionally,  if you sell assets on daily basis you will lose all money you could have gained in high profitable assets such as bitcoin.

You will also lose money in fees
 More important: you waste your time.

You shouldn't rebalance your portfolio more than once a year , and do it slowly over months.

You shouldn't risky your money based on udemi course. Read books and articles, and try to learn with the best.

Good books

https://www.amazon.com/Asset-Allocation-Balancing-Financial-Fifth/dp/0071804188
https://www.amazon.com/Little-Book-Common-Sense-Investing-ebook/dp/B075Z6HSCJ
https://www.amazon.com/Psychology-Money-Timeless-lessons-happiness/dp/0857197681

A good blog
https://www.mrmoneymustache.com/blog/
https://forum.mrmoneymustache.com/investor-alley/how-and-when-do-you-rebalance/

[Faisal2202]

This is a great suggestion, thank you! Initially this was my natural approach

Most welcome, dear I hope you will find more useful answers here on BTT, as it is full of experts (I am not calling myself an expert, but others are). 

I'm not sure what you mean I grasp the benefits of rebalancing; .......

Actually, you asked if it was worth it to rebalance the sheet, and I said the course you took might not be good enough because this is the most basic question, which they have to consult or answer in front of you to convince you that either you guys should do rebalancing or not. Well, still, everyone has their own mindset, and it might be that you are talking in some other sense and I am replying in some other sense, but I hope the tools I mentioned might be of some help to you.

[OK_Kathy]

I consider this a terrible advice. And you know that it is wrong. I can see in your commentary that you know this is irrational.

You will lose money in tax gains.
Additionally,  if you sell assets on daily basis you will lose all money you could have gained in high profitable assets such as bitcoin.

You will also lose money in fees
 More important: you waste your time.

You shouldn't rebalance your portfolio more than once a year , and do it slowly over months.

You shouldn't risky your money based on udemi course. Read books and articles, and try to learn with the best.

Good books

https://www.amazon.com/Asset-Allocation-Balancing-Financial-Fifth/dp/0071804188
https://www.amazon.com/Little-Book-Common-Sense-Investing-ebook/dp/B075Z6HSCJ
https://www.amazon.com/Psychology-Money-Timeless-lessons-happiness/dp/0857197681

A good blog
https://www.mrmoneymustache.com/blog/
https://forum.mrmoneymustache.com/investor-alley/how-and-when-do-you-rebalance/

Thank you so much! The advice is great, and I will certainly continue to educate myself. I appreciate your books recommendations.
It's reassuring to know that my doubts had a valid foundation, and glad that I reach out to ask. Your input is truly valued.

[OK_Kathy]

Actually, you asked if it was worth it to rebalance the sheet, and I said the course you took might not be good enough because this is the most basic question, which they have to consult or answer in front of you to convince you that either you guys should do rebalancing or not. Well, still, everyone has their own mindset, and it might be that you are talking in some other sense and I am replying in some other sense, but I hope the tools I mentioned might be of some help to you.

Yes, I read my question again and realized it wasn't very clear. I suppose it was more defined in my thoughts But I received the answers I was seeking! I truly appreciate the help.
 I'm now ready to try out the tools. They align with a few of the options I found Googling. There were just too many choices, and I was afraid to end up on a scamy platform.