[Poll] How do you rebalance?

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[Poll] How do you rebalance?

allocating new contributions
50
42%
selective withdrawals
2
2%
use funds that rebalance internally (eg TR funds)
7
6%
use bands: < 2.5%
2
2%
use bands: range 2.5% and < 5%
11
9%
use bands: range 5% and < 7.5%
10
8%
use bands: range 7.5% and < 10%
1
1%
use bands: 10% or more
3
3%
monthly
1
1%
quarterly
1
1%
semi-annually
3
3%
annually
11
9%
periodically (full-moon, Friday 13, sunspot cycle, etc)
1
1%
randomly
4
3%
never
4
3%
other
9
8%
 
Total votes: 120

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NAVigator
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[Poll] How do you rebalance?

Post by NAVigator »

What method do you use to keep your portfolio consistent with your desired asset allocation?

"Band rebalancing" refers to a tolerance band — when the allocation to a certain asset class strays more than some percentage from the target.

Jerry
"I was born with nothing and I have most of it left."
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pennstater2005
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Re: [Poll] How do you rebalance?

Post by pennstater2005 »

I chose internally, via Lifestrategy fund.
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Sidney
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Re: [Poll] How do you rebalance?

Post by Sidney »

I withdraw (when I need to pay bills) from whatever is over-weighted (unless there is a tax hit, in which case I might withdraw from bonds). I also have bands that would trigger re-balancing even if I didn't need money.

So I can't answer the poll; I re-balance monthly and using bands.
I always wanted to be a procrastinator.
ec97
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Re: [Poll] How do you rebalance?

Post by ec97 »

I chose new contributions, because that's how I move the biggest percent of my investments around. But the truth is that I also rebalance as ESPP and RSU shares become available, twice yearly.
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mhc
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Re: [Poll] How do you rebalance?

Post by mhc »

I chose other because I use multiple methods. I try to do it with new contributions, but that is not always sufficient. When necessary I exchange funds within my 401k. I don't have hard bands, but I do have target allocations.
52% TSM, 23% TISM, 24.5% TBM, 0.5% cash
Tamahome
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Re: [Poll] How do you rebalance?

Post by Tamahome »

I use new money for several reasons. First, I am never tempted to sell at the wrong time if I never sell. Second, if I use new money to re-balance, I do not sell right before something outperforms expectations.... Instead, I buy more of something when it is below expectations. Psychologically, it keeps me from second guessing and helps me to stay the course.
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.
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Aptenodytes
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Re: [Poll] How do you rebalance?

Post by Aptenodytes »

New money and bands; had to choose other. And the band choices don't capture what I do. I look at two percentages: of the asset and of the portfolio. If the second is small I tolerate more swings on the first. E.g. my REIT target could be off 10% as a percentage of REITs, but that gap is only half a percent of my portfolio so I could tolerate it.
Pacific
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Re: [Poll] How do you rebalance?

Post by Pacific »

Unfortunately, this poll can have several "correct" responses.
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Leif
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Re: [Poll] How do you rebalance?

Post by Leif »

I use new money (plus dividends and cap gains, if you consider that new money) and bands to rebalance. Only allowed one choice I picked bands. I figure most everyone will use new money to rebalance. I use a 5% band. For asset classes less then 20% of the portfolio I use 25% of the asset class.
Last edited by Leif on Mon Jun 09, 2014 11:25 am, edited 1 time in total.
Rodc
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Re: [Poll] How do you rebalance?

Post by Rodc »

Not sure how to answer.

New funds until the markets move too far too fast for that to work, then bands.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
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Don Christy
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Re: [Poll] How do you rebalance?

Post by Don Christy »

Since I'm accumulating, and I use several rebalancing methods, the poll doesn't work well for me (I guess I could choose "other").

I keep things mostly in balance by directing new contributions mostly to fixed income. Over the last several years, this has kept the equity/FI fairly well balanced. Additionally, I review everything more or less annually, and go a little deeper and look at US/Int'l, small/value, REIT, etc. Lastly, if there's a really bad day, I'll see if I can loss harvest, but with the performance over last few years, those opportunities are small as my recent purchases are often fixed income...

Don
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chaz
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Re: [Poll] How do you rebalance?

Post by chaz »

Each Dec when taking RMD.
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LikeWise
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Re: [Poll] How do you rebalance?

Post by LikeWise »

Not disciplined enough to rebalance at any fixed set time/pattern, so "periodically" or "randomly" would be the most suitable option. I allocate new monies when I get around to rebalancing.
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schuyler74
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Re: [Poll] How do you rebalance?

Post by schuyler74 »

I rebalance once a year, whenever I fill my Roth IRA.
NAVigator wrote:"Band rebalancing" refers to a tolerance band — when the allocation to a certain asset class strays more than some percentage from the target.
For those who voted "use bands: range 5% and < 7.5%", how do you apply these percentages? Say you have 60% stocks and 40% bonds. Does that mean you rebalance when bonds are off 5% of 40% (i.e. 38% to 42%), or when they're 5% off 100% (i.e. 35% to 45%).
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Re: [Poll] How do you rebalance?

Post by NAVigator »

schuyler74 wrote:I rebalance once a year, whenever I fill my Roth IRA.
NAVigator wrote:"Band rebalancing" refers to a tolerance band — when the allocation to a certain asset class strays more than some percentage from the target.
For those who voted "use bands: range 5% and < 7.5%", how do you apply these percentages? Say you have 60% stocks and 40% bonds. Does that mean you rebalance when bonds are off 5% of 40% (i.e. 38% to 42%), or when they're 5% off 100% (i.e. 35% to 45%).
I resemble that. :shock: I have an excel spreadsheet where the desired asset allocation is displayed in a bar graph alongside the actual portfolio. Each of the asset classes are listed. For me that is a basic portfolio with bonds split into Total Bond, Intermediate Term Investment Grade and TIPS. The equities are divided between total US and total Int'l. When one value exceeds 5% from the desired level, I rebalance. I make an exception for TIPS since it is only a small part of the mix.
"I was born with nothing and I have most of it left."
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Leif
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Re: [Poll] How do you rebalance?

Post by Leif »

schuyler74 wrote:I rebalance once a year, whenever I fill my Roth IRA.
NAVigator wrote:"Band rebalancing" refers to a tolerance band — when the allocation to a certain asset class strays more than some percentage from the target.
For those who voted "use bands: range 5% and < 7.5%", how do you apply these percentages? Say you have 60% stocks and 40% bonds. Does that mean you rebalance when bonds are off 5% of 40% (i.e. 38% to 42%), or when they're 5% off 100% (i.e. 35% to 45%).
For me 5% of asset class unless it is < 20% in which case I use 25% of asset class. In your example 5% around 40% (35 - 45).

If my asset class is 12% of portfolio then I will re-balance at 9-15%.
Last edited by Leif on Tue Jun 10, 2014 10:57 am, edited 1 time in total.
placeholder
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Re: [Poll] How do you rebalance?

Post by placeholder »

I use ranges but between contribution and redirecting distributions I haven't needed to sell anything in a few years.
Grt2bOutdoors
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Re: [Poll] How do you rebalance?

Post by Grt2bOutdoors »

New money and bands.
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Angst
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Re: [Poll] How do you rebalance?

Post by Angst »

Gee, I'm 1 of only 2 using bands of 10% or more? I expected more.
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Ice-9
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Re: [Poll] How do you rebalance?

Post by Ice-9 »

My big rule is rebalancing per Larry Swedroe's 5/25 rule. However, rebalancing is rarely triggered according to that rule because I somewhat rebalance with new contributions each pay period. I set it to whatever asset class needs a boost most, which usually means bonds, and hardly ever trigger my bands. Though, during the 2008-9 crash, I had to rebalance three times into equities.
Rodc
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Re: [Poll] How do you rebalance?

Post by Rodc »

Angst wrote:Gee, I'm 1 of only 2 using bands of 10% or more? I expected more.
Depends what one means, which as so often happens is not at all clear in how the poll is constructed.

As far as I know folks using bands tend to do something like 5% on stocks and bonds, absolute, and 20% relative on sub assets.

So if one had 50% in stocks they would rebalance between stocks and bonds if stocks hit 45% or 55%.

Within stocks, if they had 30% TSM amd 20% Total international, they would rebalance if TSM or ITSM were off by 6%/4% respectively. If they had 15% TSM and 15% SCV on the US side, they would rebalace them if they got off by 3%.

When you say bands of 10% or more are you talking about absolute or relative?

And more importantly, OP, what did you mean?
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
Bungo
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Re: [Poll] How do you rebalance?

Post by Bungo »

Not sure why only one answer is allowed. I allocate using new contributions and/or by shifting money between asset classes, and I use 5% rebalancing bands. I guess I'll vote "other" :D
larmewar
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Re: [Poll] How do you rebalance?

Post by larmewar »

Where's the choice for eclectic?
New contributions
Balanced funds
Bands
Somewhat random
Part of tinkering
Limit contributions/excess to separate savings

Lar
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NAVigator
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Re: [Poll] How do you rebalance?

Post by NAVigator »

Rodc wrote:When you say bands of 10% or more are you talking about absolute or relative?

And more importantly, OP, what did you mean?
In the OP, I stated; "Band rebalancing" refers to a tolerance band — when the allocation to a certain asset class strays more than some percentage from the target.

It isn't a test. If the options don't fit your model, say so. That is why these posts about the poll are instructive. This gives an opportunity for you to explain how you rebalance.
Bungo wrote:Not sure why only one answer is allowed. I allocate using new contributions and/or by shifting money between asset classes, and I use 5% rebalancing bands. I guess I'll vote "other" :D
I didn't realize that rebalancing a portfolio could involve multiple methods, and if so, which would have priority. Thanks for describing your strategy.
larmewar wrote:Where's the choice for eclectic?
"Other" seems to be gaining momentum.

If the choices given in the polls do not fit your method, please describe how you rebalance your portfolio. Perhaps it would be helpful to explain why that technique is used.

Thanks for the many replies. As Taylor has often stated, "There are many roads to Dublin."

Jerry
"I was born with nothing and I have most of it left."
stan1
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Re: [Poll] How do you rebalance?

Post by stan1 »

Since 2008 I've done the following: I've used bands, but one of the following usually seems to take precedence. I've used random. I've rebalanced so I'll sleep better. I've rebalanced with new money (and dividend income). I've donated appreciated securities to a DAF. I've sold funds to pay off mortgage or buy a car. I've sold total bond market because the yield was low and CDs were safer -- but will probably go back at some point. I've tax loss harvested.

I like to keep my options open -- and that includes a better approach than cap based index funds if those come along. The world with no risk doesn't exist.
Warning: I am about 80% satisficer (accepting of good enough) and 20% maximizer
LongerPrimer
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Re: [Poll] How do you rebalance?

Post by LongerPrimer »

We have some GLIW deferred VA's that are generous by today's standard. Although there is auto rebalancing, that if you have a guaranteed Income Account growth, one should try to maximize the Actual Account. Thus when I remember (random) I will rebalance in hopes of maximizing outcome.
lowerleisureclass
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Re: [Poll] How do you rebalance?

Post by lowerleisureclass »

At the moment, in efforts to convert to a more bogel-ish portfolio, I rebalance mosty by selling whatever individual stock I can bring myself to let go of in my Roth once a month or so and putting that $$ into VG Int Term Bond ETF as I/we are quite underweight on bonds.
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grabiner
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Re: [Poll] How do you rebalance?

Post by grabiner »

Allowing multiple answers would be useful, as I rebalance in three ways.

Whenever I make a new taxable contribution, I invest it in the most underweighted asset class in my taxable account.

Every January, when I make my IRA contribution, I do a full rebalance except for tax costs; I won't sell for a taxable gain unless I am beyond my rebalancing bands.

I rebalance with bands if necessary; this has happened only twice in my 17 years of investing. In 2008, I was overweighted in bonds because of the market crash. In 2010, I was overweighted in REITs because they recovered so rapidly.
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Dandy
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Re: [Poll] How do you rebalance?

Post by Dandy »

I hate to make large money moves.
I am most concerned with the equity vs fixed income allocation. Being retired I have little opportunity to use new money to re balance.
I have a band of 3% for equities and try to keep my allocation in that 3% window. I have a lot of divs and cap gains sent to money market and some brokerage CDs. This serves as "new" money to help rebalance.
If the my equities get to the high end of the band I might trim it back a bit or vice versa.
If a sub allocation e.g.If REITs are getting hammered I might see it as an opportunity to buy/rebalance "early".

I'm kind of like a river boat pilot - making a few small course corrections as needed to avoid oncoming traffic or running aground -- trying to avoid wild corrections that might upset the passengers!
In 2013's bull market I made 3 or 4 course corrections in 2014 so far none.
Once a year I do a major review and make any corrections that are needed especially to the sub allocations.
rkhusky
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Re: [Poll] How do you rebalance?

Post by rkhusky »

I chose bands<2.5% because that is what I mostly do. I check my AA once or twice a month and since that is much more time consuming than actually rebalancing, I figure "Why not rebalance when I am off by a percent or so?". That way I don't have to make large dollar transactions, which could result in buyer/seller remorse. I don't try to capture any "rebalancing bonus," but will check my AA if there is a big swing one way or the other in the market.

I also direct new contributions in taxable and Roth to the slices that are down. My 401K contributions are on auto-pilot.
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JPH
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Re: [Poll] How do you rebalance?

Post by JPH »

I do it annually. Usually, I buy tax deferred using money in taxable accounts.
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