How often to rebalance?
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How often to rebalance?
(personal info removed)
Last edited by BuyHighSellLow on Tue Apr 10, 2018 10:41 am, edited 1 time in total.
Re: How often to rebalance?
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.
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.
Re: How often to rebalance?
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.
Re: How often to rebalance?
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.
Re: How often to rebalance?
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...
http://www.tdainstitutional.com/pdf/Opp ... yanani.pdf
Of course future results may differ from past results...
Re: How often to rebalance?
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.
Re: How often to rebalance?
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.
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.
Re: How often to rebalance?
Also use new cash ,dividends,capital gains to achieve desired asset allocation.
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
Re: How often to rebalance?
Gordon
Re: How often to rebalance?
we check allocations quarterly and re-balance if the equity percentage is off by 5% or more.