How often to rebalance?

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BuyHighSellLow
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Joined: Mon Feb 16, 2015 8:21 pm

How often to rebalance?

Post by BuyHighSellLow »

(personal info removed)
Last edited by BuyHighSellLow on Tue Apr 10, 2018 10:41 am, edited 1 time in total.
AWH_CPA
Posts: 247
Joined: Tue Jan 20, 2015 5:44 pm

Re: How often to rebalance?

Post by AWH_CPA »

I forget where I read it, but recently there was an article that went through the returns of four types of investors.

1) Never rebalances
2) Rebalanced once a month
3) Rebalanced quarterly
4) Rebalanced yearly

The worst return for this hypothetical was the never rebalances. The second worst return was the rebalanced monthly. The third worst was the rebalanced yearly and the best return was the rebalance quarterly.

I wish they had ran the example only rebalancing when it got more than 5% out of balance.
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powermega
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Location: Colorado

Re: How often to rebalance?

Post by powermega »

My overall portfolio is tied to the Vanguard 2035 Target Date Fund (TDF). The Vanguard TDFs change their internal allocations every calendar quarter, so I rebalance my portfolio accordingly every calendar quarter (Jan, April, July, Oct).
Even a stopped clock is right twice a day.
Jeff7
Posts: 329
Joined: Sat Nov 24, 2012 1:30 pm

Re: How often to rebalance?

Post by Jeff7 »

About once a year, depending on when/if I remember to do it, and only if it's outside of the boundaries I've set.
red5
Posts: 798
Joined: Sun Apr 01, 2012 4:42 pm

Re: How often to rebalance?

Post by red5 »

I found this to be interesting and informative. It is worth the time to read in my humble opinion.

http://www.tdainstitutional.com/pdf/Opp ... yanani.pdf

Of course future results may differ from past results...
sport
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Location: Cleveland, OH

Re: How often to rebalance?

Post by sport »

I prefer to rebalance whenever the allocation reaches a rebalancing band limit. If the limit is not reached, no action is necessary. This keeps the risk level within bounds. This makes more sense to me than doing it according to the calendar. Of course, this requires keeping track of the allocation.
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beyou
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Re: How often to rebalance?

Post by beyou »

Continuously. I invest both new cash and dividends wherever needed, to get me to my target.
That is usually enough to keep me at my AA. Mostly this ends up being annual since
most new cash is bonus related in January, but each month and quarter dividends are
not simply reinvested in the same fund. So I do annual/quarterly/monthly hence
i call it continuous.

When I retire, I am going to try and spend from selected funds (principle and dividends) in a similar manner.
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Toons
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Location: Hills of Tennessee

Re: How often to rebalance?

Post by Toons »

Also use new cash ,dividends,capital gains to achieve desired asset allocation. :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
gkaplan
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Location: Portland, Oregon

Re: How often to rebalance?

Post by gkaplan »

Gordon
J295
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Re: How often to rebalance?

Post by J295 »

we check allocations quarterly and re-balance if the equity percentage is off by 5% or more.
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