Rebalancing frequency

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bugleheadd
Posts: 162
Joined: Fri Nov 29, 2019 11:25 am

Rebalancing frequency

Post by bugleheadd » Tue Mar 24, 2020 7:52 am

is it better to rebalance more often than less often? are there any metrics that show differences in reblanacing daily/weekly/monthly/quarterly/semi annual/ annual? in these market downturns, is it better to monitor and rebalance more often to buy more shares on the way down?

livesoft
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Joined: Thu Mar 01, 2007 8:00 pm

Re: Rebalancing frequency

Post by livesoft » Tue Mar 24, 2020 7:55 am

Don't rebalance based on the calendar. Rebalance based on what has happened to the asset allocation of your portfolio. Your AA does not go out of whack on the 1st of every month, nor quarter, nor annually, nor every 4 years.

Look as often as you want to, but mostly look when news headlines have "worst" or "best" in them.

We can easily define what it is best to do: Rebalance into equities when they are at their bottom and about to go up. Rebalance out of equities when they are at their top and about to go down. Most people see a problem trying to do that, so what is good enough has to be decided by each investor for themselves.

In other words, there is no best answer to your question, but here is link to one study: https://www.onefpa.org/journal/Pages/Op ... agers.aspx
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Eagle33
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Re: Rebalancing frequency

Post by Eagle33 » Tue Mar 24, 2020 10:48 pm

Here is a Vanguard paper: A guide to smart rebalancing.
Rocket science is not “rocket science” to a rocket scientist, just as personal finance is not “rocket science” to a Boglehead.

flaccidsteele
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Location: Canada

Re: Rebalancing frequency

Post by flaccidsteele » Wed Mar 25, 2020 12:22 am

bugleheadd wrote:
Tue Mar 24, 2020 7:52 am
is it better to rebalance more often than less often? are there any metrics that show differences in reblanacing daily/weekly/monthly/quarterly/semi annual/ annual? in these market downturns, is it better to monitor and rebalance more often to buy more shares on the way down?
I market time, ahem, rebalance only during bear markets. I like buying more when prices go down

I don’t rebalance based on time passed. That’s arbitrary. Makes no sense
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat

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Phineas J. Whoopee
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Joined: Sun Dec 18, 2011 6:18 pm

Re: Rebalancing frequency

Post by Phineas J. Whoopee » Wed Mar 25, 2020 9:11 pm

What do you expect rebalancing to accomplish? It might or might not end up doing that, but the answer can inform our response to your frequency question.
PJW

JustinR
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Re: Rebalancing frequency

Post by JustinR » Wed Mar 25, 2020 9:45 pm

bugleheadd wrote:
Tue Mar 24, 2020 7:52 am
is it better to rebalance more often than less often? are there any metrics that show differences in reblanacing daily/weekly/monthly/quarterly/semi annual/ annual? in these market downturns, is it better to monitor and rebalance more often to buy more shares on the way down?
Once a year, on your birthday.

https://www.vanguard.com/pdf/ISGPORE.pdf

pascalwager
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Re: Rebalancing frequency

Post by pascalwager » Thu Mar 26, 2020 12:52 am

I have a 20% balancing band, so in normal markets, I rebalance about every four years, or so. But I did rebalance very recently after the 30% drop.
retired, pension, no SS | stocks/bonds, 55/45 | stocks: US/non-US, 50/50 | bonds: TIPS/TBM, 50/50 | tilts: large value, small cap | cash ~1% | 20% balance band

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