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  • Rebalancing

    As we reach the end of my first year with an actual financial plan, it comes time for me to think about rebalancing. I originally had planned to rebalance once a year (as I can’t help but “tinker” as WCI says) or when things are off by more than an absolute 5%. But I am still early-ish in my accumulation phase, so all contributions during the year are at my desired asset allocation. I find I’m within 1% (give or take) of what my goals are. Not sure if it’s worth it when things are pretty close.
    What do other people do? Rebalance no matter what or wait till it is far enough off from your asset allocation?

  • #2
    My rebalancing has generally been easily accomplished with new money infusions.

     

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    • #3
      Accumulation phase - additional money re-directed or sell/buy in tax protected accounts. Wouldn't care unless >5% off.

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      • #4
        I'm in distribution phase of life.  I  use WIDE parameters :   40% off target in taxable, and 25% off target in tax-protected.

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        • #5
          In accumulation, most of the time you can just direct money at the asset class that's low when making new investments. Occasionally, I need to make an exchange in Roth or 401(k) to get back into balance.

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          • #6




            As we reach the end of my first year with an actual financial plan, it comes time for me to think about rebalancing. I originally had planned to rebalance once a year (as I can’t help but “tinker” as WCI says) or when things are off by more than an absolute 5%. But I am still early-ish in my accumulation phase, so all contributions during the year are at my desired asset allocation. I find I’m within 1% (give or take) of what my goals are. Not sure if it’s worth it when things are pretty close.
            What do other people do? Rebalance no matter what or wait till it is far enough off from your asset allocation?
            Click to expand...


            Some people rebalance on a certain day each year (e.g. their birthday) so that they don't have to check their investment balances too frequently. Others will rebalance only when it is a certain threshold each year. I don't see a necessity to rebalance now if you're within 1% of your target allocation.

            -WSP

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            • #7
              anytime i add new money ill make everything match up. i will only move items around if off by 5% or more.

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