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Rebalancing your portfolio
Posted on 8/17/24 at 7:45 am
Posted on 8/17/24 at 7:45 am
When I checked my portfolio this morning, I realized that my domestic/international holdings had reached 83%/17%. As a general rule, I aim to keep them at 75/25, but I’m not overly strict about it. But this spread caught my attention and got me thinking about general rebalancing philosophy, methods, etc, so I figured I would ask for the board’s thoughts on how far out of ratio is too much for your comfort, whether you sell or simply shift new investing to the underweight holding, etc, etc. These are all in tax advantaged accounts, so not worried about tax implications for any courses of action.
3
Posted on 8/17/24 at 8:17 am to Joshjrn
I don't invest internationally. If I can't get it done with the consumers and companies in the USA, then there's something seriously wrong. I get the diversification angle, but I see no need for it. The large US companies are engaging in global commerce anyway.
Posted on 8/17/24 at 8:27 am to RoyalWe
quote:
I don't invest internationally. If I can't get it done with the consumers and companies in the USA, then there's something seriously wrong. I get the diversification angle, but I see no need for it. The large US companies are engaging in global commerce anyway.
Then pretend instead of domestic and international I asked about equities and bond rebalancing. The purpose of this thread was to get advice on rebalancing, not on the underlying wisdom of my allocations
Posted on 8/17/24 at 9:04 am to Joshjrn
Rebalance once a year in tax advantaged if you want to keep a strict strategy in play. I don’t think any more frequently is helpful.
Posted on 8/17/24 at 9:13 am to lynxcat
quote:
Rebalance once a year in tax advantaged if you want to keep a strict strategy in play. I don’t think any more frequently is helpful.
I don’t think I would consider doing it more frequently. But that still leaves the question of whether one should doggedly rebalance, or whether to leave a bit of slack in the line. And then when rebalancing, do so in a moment or just shift new investment percentages until the accounts have balanced back out?
Posted on 8/17/24 at 9:50 am to Joshjrn
Rebalancing is selling the good stuff to buy more under performers. Sometimes that may be necessary but shouldn’t be automatic, in my opinion.
Posted on 8/17/24 at 9:57 am to CougarBait
In the context of individual equities, I would agree. In the context of regions of the world, there tends to be ebb and flow over time. US domestics have exploded in the last decade. Doesn’t necessarily mean that will always be the case, all the time.
Posted on 8/17/24 at 11:21 am to Joshjrn
I rebalance every quarter.
I value cost average using a bond fund and a stock fund. This strategy draws bond fund money into stocks as stocks underperform and moves money from stocks to bonds as stocks overperform.
You can choose ETFs relative to your risk tolerance. I have a high risk tolerance and mostly used TQQQ and AGG.
It's worked for me. I retired in my early 50s with more money than I ever thought possible.
I value cost average using a bond fund and a stock fund. This strategy draws bond fund money into stocks as stocks underperform and moves money from stocks to bonds as stocks overperform.
You can choose ETFs relative to your risk tolerance. I have a high risk tolerance and mostly used TQQQ and AGG.
It's worked for me. I retired in my early 50s with more money than I ever thought possible.
Posted on 8/17/24 at 12:55 pm to lynxcat
If it’s out of line with your goal then rebalance. I have been hearing it’s better to rebalance also within each asset class.
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