Have you rebalanced to bonds this year?

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anjou
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Have you rebalanced to bonds this year?

Post by anjou » Thu Aug 09, 2018 12:24 am

Hi,

Total Stock Index has increased +8.34% while Total Bond Index changed -1.54% year to date. I suppose your asset allocation would have changed by an additional 2%. Have you rebalanced to bonds or let your asset allocation slide? I went back to read our wiki article on Rebalancing and found Larry's rule useful.
Larry Swedroe uses a "5/25 rule" which can be restated:

Absolute percentage of 5% for allocations 20% or greater: When asset classes deviate from their target by an absolute percentage of 5%. For example, if your target asset allocation is 60% equities and 40% fixed income, you would rebalance your portfolio when your portfolio reaches (65% equities / 35% fixed income) or (55% equities / 45% fixed income).

Relative percentage of 25% for allocations less than 20%: When asset classes deviate from their target by a relative percentage of 25%. For example, if your target equities asset allocation is 60%, composed of 45% Total Stock Market and 15% Total International, you would rebalance Total International if it changes by more than +/- 3.75% (25% of 15%).
Thanks.
Anjou.

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corn18
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Re: Have you rebalanced to bonds this year?

Post by corn18 » Thu Aug 09, 2018 12:30 am

New contributions are all going to bonds, so that is keeping my 60/40 at 60/40.

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Phineas J. Whoopee
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Re: Have you rebalanced to bonds this year?

Post by Phineas J. Whoopee » Thu Aug 09, 2018 3:14 pm

I have not, although I'm within 1% of portfolio from the limit of my tolerance band. Should it be triggered, then yes I'll rebalance. If not then I won't.
PJW

goblue100
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Re: Have you rebalanced to bonds this year?

Post by goblue100 » Thu Aug 09, 2018 3:23 pm

corn18 wrote:
Thu Aug 09, 2018 12:30 am
New contributions are all going to bonds, so that is keeping my 60/40 at 60/40.
I've been sliding this lever as well. I went 100% bonds for a few months, but now my new contributions are 40% stocks and 60% bonds. I'll see where I'm at September 30th. I check my allocation quarterly.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns

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Toons
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Re: Have you rebalanced to bonds this year?

Post by Toons » Thu Aug 09, 2018 3:25 pm

Not personally but
I think the Target Date Fund we own has.
: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

jebmke
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Re: Have you rebalanced to bonds this year?

Post by jebmke » Thu Aug 09, 2018 3:37 pm

I have had some excess dividends from equity that I put into TE bonds so, theoretically, yes. I have not sold equity, however.
When you discover that you are riding a dead horse, the best strategy is to dismount.

RobLyons
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Re: Have you rebalanced to bonds this year?

Post by RobLyons » Thu Aug 09, 2018 3:40 pm

Having 30+ years until I need the money, no I have not. I'm about 90/10. Very aggressive
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tesuzuki2002
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Re: Have you rebalanced to bonds this year?

Post by tesuzuki2002 » Thu Aug 09, 2018 4:14 pm

corn18 wrote:
Thu Aug 09, 2018 12:30 am
New contributions are all going to bonds, so that is keeping my 60/40 at 60/40.
I'm not 100% bonds since I only have a 7% bond portfolio allocation. However, I've been contributing a lot more to bonds this year..

dcabler
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Re: Have you rebalanced to bonds this year?

Post by dcabler » Thu Aug 09, 2018 4:17 pm

Not yet, still well inside my bands...

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House Blend
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Re: Have you rebalanced to bonds this year?

Post by House Blend » Thu Aug 09, 2018 4:47 pm

My allocation got out of whack in January, when US + Intl were both up sharply.

I moved about 1% from equity to fixed income on 1/3/18. (All inside tax-advantaged, so no tax consequences.) The market kept going up and took that 1% back, so I moved another 1% to fixed income on 1/22/18. The market apparently decided to stop competing with me shortly after that.

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ruralavalon
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Re: Have you rebalanced to bonds this year?

Post by ruralavalon » Thu Aug 09, 2018 5:14 pm

No. Our target asset allocation is 50/50, currently it is 53/47, and we have not hit the rebalancing band which is 55/45.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

aristotelian
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Re: Have you rebalanced to bonds this year?

Post by aristotelian » Thu Aug 09, 2018 5:47 pm

Just did some yesterday and new money will go to bonds as well.

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tooluser
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Re: Have you rebalanced to bonds this year?

Post by tooluser » Thu Aug 09, 2018 6:02 pm

Yes, but not because of the market movement. My IPS has me on a glideslope of 2% less stocks/more bonds each year until I reach a target age. I make the change approximately 6 months before my birthday. I may or may not check the allocation percentages leading up to the next adjustment period; it's not a big deal if it's a little out of whack for a year.
"A calm and modest life brings more happiness than the pursuit of success combined with constant restlessness." -- Albert Einstein, just before he won the Nobel Prize.

z3r0c00l
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Re: Have you rebalanced to bonds this year?

Post by z3r0c00l » Thu Aug 09, 2018 6:35 pm

Yes, thousands! Happy to do it, it is paying 3.15% now.

TropikThunder
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Re: Have you rebalanced to bonds this year?

Post by TropikThunder » Thu Aug 09, 2018 8:42 pm

anjou wrote:
Thu Aug 09, 2018 12:24 am
Have you rebalanced to bonds or let your asset allocation slide?
I haven't rebalanced at all since all of my fixed income allocation is in TIAA Traditional, which is paying 4.00%/3.25% depending on whether it's my contribution or the employer match. Traditional never goes down. :beer

junetree
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Re: Have you rebalanced to bonds this year?

Post by junetree » Fri Aug 10, 2018 1:12 pm

Been taking our dividends in cash and been rebalancing accordingly.

rgs92
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Re: Have you rebalanced to bonds this year?

Post by rgs92 » Fri Aug 10, 2018 1:15 pm

Yep. I rebalance as often as possible. I keep a big chunk of my money in Vanguard balanced index for that reason.

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John151
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Re: Have you rebalanced to bonds this year?

Post by John151 » Fri Aug 10, 2018 2:43 pm

I haven’t sold any stocks, but I’ve directed my investment income and any new money into a tax-exempt bond fund. This keeps me within my allocation bands.

3funder
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Re: Have you rebalanced to bonds this year?

Post by 3funder » Fri Aug 10, 2018 2:53 pm

Yes, but mostly due to additional stock investing in my taxable account.

nwffdiver
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Re: Have you rebalanced to bonds this year?

Post by nwffdiver » Fri Aug 10, 2018 2:56 pm

Yes I too had to move about 7% over to my wife’s TBM from TSM in her rollover IRA. :D

WanderingDoc
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Re: Have you rebalanced to bonds this year?

Post by WanderingDoc » Fri Aug 10, 2018 2:58 pm

Is there a good article/guide on rebalancing bands and techniques?
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vineviz
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Re: Have you rebalanced to bonds this year?

Post by vineviz » Fri Aug 10, 2018 3:00 pm

WanderingDoc wrote:
Fri Aug 10, 2018 2:58 pm
Is there a good article/guide on rebalancing bands and techniques?
The best strategy seems to be to rebalance at some interval between annually and never.

https://www.vanguard.com/pdf/ISGPORE.pdf
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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sergeant
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Re: Have you rebalanced to bonds this year?

Post by sergeant » Fri Aug 10, 2018 3:23 pm

I rebalance to stable value and MM. Almost no bonds in my FI. I think rates will be rising.
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Dead Man Walking
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Re: Have you rebalanced to bonds this year?

Post by Dead Man Walking » Fri Aug 10, 2018 3:36 pm

I'm waiting for a market correction to automatically rebalance my portfolio. I have usually rebalanced with new money; however, my new money is going to a remodeling project.

DMW

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ruralavalon
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Re: Have you rebalanced to bonds this year?

Post by ruralavalon » Fri Aug 10, 2018 3:39 pm

vineviz wrote:
Fri Aug 10, 2018 3:00 pm
WanderingDoc wrote:
Fri Aug 10, 2018 2:58 pm
Is there a good article/guide on rebalancing bands and techniques?
The best strategy seems to be to rebalance at some interval between annually and never.

https://www.vanguard.com/pdf/ISGPORE.pdf
Also see the wiki article, "Rebalancing".
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

UpperNwGuy
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Re: Have you rebalanced to bonds this year?

Post by UpperNwGuy » Fri Aug 10, 2018 4:26 pm

If you were going to rebalance, you should have done it in the third week of January when TSM hit its peak. Everything since January has been a series of ups and downs.

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