Did I make a profit by rebalancing?

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nydoc
Posts: 146
Joined: Mon Jul 22, 2019 5:57 pm

Did I make a profit by rebalancing?

Post by nydoc »

Hi,
I have been investing in total stock index fund every Tuesday and Friday for the past few years. My target allocation is 75:25. During the recent market slide, my allocation changed to 68:32 so I rebalanced by converting bond to stock fund in my 401K. Meanwhile I kept buying total stock in my taxable. Now my allocation is 80:20 and I want to convert stock fund to bond in my 401k to reach 75:25. So my question is did I make any profit in the end or I am just back to where I was before the downturn?
Thanks.
KlangFool
Posts: 17690
Joined: Sat Oct 11, 2008 12:35 pm

Re: Did I make a profit by rebalancing?

Post by KlangFool »

nydoc wrote: Mon Jun 08, 2020 9:36 pm Hi,
I have been investing in total stock index fund every Tuesday and Friday for the past few years. My target allocation is 75:25. During the recent market slide, my allocation changed to 68:32 so I rebalanced by converting bond to stock fund in my 401K. Meanwhile I kept buying total stock in my taxable. Now my allocation is 80:20 and I want to convert stock fund to bond in my 401k to reach 75:25. So my question is did I make any profit in the end or I am just back to where I was before the downturn?
Thanks.
Yes, you made a profit by rebalancing. You can tell by comparing your portfolio at the beginning of the year versus now and minus the new contributions.

KlangFool
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