Rebalancing Question

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Topic Author
lloydbraun
Posts: 101
Joined: Mon May 30, 2011 9:14 pm

Rebalancing Question

Post by lloydbraun »

Just a quick question for the board. I just did my annual rebalance in a few months back so I won't be doing another one until 2015. This past year I just allowed TIAA-CREF to rebalance my account automatically on my birthday (I use all Vanguard Institutional funds in my TIAA-CREF 403B). Am I better off doing this every year or just manually adjusting my monthly asset allocation for a couple of months when my target allocation gets a little distorted? Does it make any real difference?
livesoft
Posts: 85971
Joined: Thu Mar 01, 2007 7:00 pm

Re: Rebalancing Question

Post by livesoft »

There is no way to answer your question without predicting the future.

I will say that I prefer to rebalance into equities on the lowest day of the year for equities and to rebalance out of equities on the highest day of the year for equities.

See also: http://www.bogleheads.org/wiki/Rebalancing and in particular the last link in the "External links" section which is a thread created this month by Larry Swedroe.
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Topic Author
lloydbraun
Posts: 101
Joined: Mon May 30, 2011 9:14 pm

Re: Rebalancing Question

Post by lloydbraun »

Well, with that strategy you must win every year, just like the active managers promise.
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Taylor Larimore
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Joined: Tue Feb 27, 2007 7:09 pm
Location: Miami FL

Re: Rebalancing

Post by Taylor Larimore »

lloydbraun wrote:Just a quick question for the board. I just did my annual rebalance in a few months back so I won't be doing another one until 2015. This past year I just allowed TIAA-CREF to rebalance my account automatically on my birthday (I use all Vanguard Institutional funds in my TIAA-CREF 403B). Am I better off doing this every year or just manually adjusting my monthly asset allocation for a couple of months when my target allocation gets a little distorted? Does it make any real difference?
Rebalancing is another one of those topics where experts disagree. This tells me it probably makes little difference that can be foreseen. Personally, I would do what is easiest for you.

Don't forget to use your contributions when purchasing under-weighted funds and withdrawals when selling over-weighted funds.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
livesoft
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Re: Rebalancing Question

Post by livesoft »

I only wrote what I prefer to do. I did not write what I actually do.
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Topic Author
lloydbraun
Posts: 101
Joined: Mon May 30, 2011 9:14 pm

Re: Rebalancing Question

Post by lloydbraun »

Thanks Tayler, that what was I looking for...just was wondering if one approach had a slight statistical advantage over the other.

Livesoft, yes obviously that's the case, unless you're psychic.
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