A rebalance that ignores tax can cost more in gains than it ever saves in risk. Here is what per-lot accounting changes on an AI investing platform built for taxable accounts.
Rebalancing has an obvious cost, the commission, and a hidden one, the tax. For a taxable account the hidden cost is usually the bigger number. Sell a low-basis, short-term lot to trim a position and the gain you realise can dwarf the risk you removed.
A ledger, not an estimate
Dayonik keeps a per-lot cost basis from the very first trade. Each sale is attributed to specific lots and classified short-term or long-term. So when the rebalancer prices a trade, it can lean towards the min-tax lots and show the estimated tax right beside the commission.
The effect is simple to describe and easy to miss without the accounting. You optimise after tax, not merely before it. A trade that looked worthwhile on a pre-tax view often does not survive once the realised gain is on the table.
Where the savings come from
- Loss lots are realised first, so a rebalance can bank a loss instead of a gain.
- Long-term lots are preferred over short-term ones, at the lower rate.
- A no-trade drift band stops small moves from churning the book for no after-tax benefit.