Rebalancing without selling

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Joined: Tue Oct 07, 2008 1:08 pm

Rebalancing without selling

Postby scottyja » Tue Jan 29, 2013 12:17 pm

I noticed last week that my HSA investments are unbalanced - not by much, just 8-10% between the three funds. My other investments (401k and IRA) have options to automatically rebalance the portfolio, but my HSA does not. I gave them a call and explained what I was trying to do and found out that I will be hit up with transaction fees if/when I do rebalance.

So my question is, should I 1) wait until the funds are heavily unbalanced (20% or so) and just take the transaction hit, or 2) purchase only the under-balanced funds for the next 6 weeks or so until it gets back to the target allocation?

My concern with option 2 is that it will only take approximately 3 contributions to get allocation correct because my overall balance is rather small in comparison to the contributions. However, in 5-10 years down the road, what do I do if the market heavily fluctuates and the account is much larger? It could take many months or even years to rebalance only with new contributions.

Thanks for any thoughts on this.

Posts: 590
Joined: Tue Nov 01, 2011 11:28 am

Re: Rebalancing without selling

Postby BuckyBadger » Tue Jan 29, 2013 12:23 pm

I would rebalance with incoming funds.

But my real question is -- wouldn't it be easier for you HSA to be only ONE fund, that - when taken as a whole with your other investments - complements your overall AA?

My AA is 70/30 stocks/bonds, but my HSA is 100% total US stock. It's just a part of the whole.

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