Poll: do you "rebalance" and how often?
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I'm not looking for the pros/cons of rebalancing -- please save that discussion for another thread.
Do you rebalance your portfolio? If so, how often or what triggers a rebalance?
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I do not rebalance in the classical sense.
I do practice a different rebalancing based on dividend growth or fixed dividends, but not to the point of selling securities to effect the change.
Do you rebalance your portfolio? If so, how often or what triggers a rebalance?
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I do not rebalance in the classical sense.
I do practice a different rebalancing based on dividend growth or fixed dividends, but not to the point of selling securities to effect the change.
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Doesn't this question depend on an answer (in the affirmative) to: do you use explicit asset allocation? In other words, rebalance to *what*? If someone answers "No", is that "No, I have an asset allocation strategy but I don't rebalance", or "No, I don't have an asset allocation strategy to keep balanced" ?
I just started investing early on this year, as i started to realize that most of my 'net worth' is tied in my house. So i think i am kinda doing some re-balancing in my portfolio.. because before it was only in 'real estate' (of the liability type, i have learned) and cash.
I read on 7millions7years that your house should only be accountable for like 20% of your net worth and for me it is currently about 75%. My goal is to put aside enough money to get that 75% on the stock side of the portfolio.
Regarding the balance inside the stock side: i am currently for 80% in ETFs and the remaining 20% in cash.
I read on 7millions7years that your house should only be accountable for like 20% of your net worth and for me it is currently about 75%. My goal is to put aside enough money to get that 75% on the stock side of the portfolio.
Regarding the balance inside the stock side: i am currently for 80% in ETFs and the remaining 20% in cash.
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There aren't as many participants in this poll compared to the poll on index funds. Makes me wonder if most people even have a concept of rebalancing, regardless of whether it's the conventional term of rebalancing.
@Steve Austin - the answers are a little muddled, so you're probably right (and I didn't help matters by muddling the answer at the very start!). If I take a mulligan on this, at least there are some ideas to follow up with.
@Steve Austin - the answers are a little muddled, so you're probably right (and I didn't help matters by muddling the answer at the very start!). If I take a mulligan on this, at least there are some ideas to follow up with.
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il-besa, what they're talking about is asset allocation. That's where you decide what percentage of your investments is devoted to cash, equities, bonds, or commodities/precious metals.
The theory is that if a particular portion of your investments are doing well in comparison to the rest, then there will come a point that you'll want to re-balance your assets. For example, if you decide that you want 10% of your assets in gold and the run-up of the shiny stuff has made it 20% of your assets, then at some point you would decide to sell gold and buy other assets to get the gold portion back down to 10%.
Another option is to just redirect future deposits to the investments that are behind. Depending on how out of wack your allocation is and how much you're investing on an on-going basis, this strategy can keep you fairly balanced.
The theory is that if a particular portion of your investments are doing well in comparison to the rest, then there will come a point that you'll want to re-balance your assets. For example, if you decide that you want 10% of your assets in gold and the run-up of the shiny stuff has made it 20% of your assets, then at some point you would decide to sell gold and buy other assets to get the gold portion back down to 10%.
Another option is to just redirect future deposits to the investments that are behind. Depending on how out of wack your allocation is and how much you're investing on an on-going basis, this strategy can keep you fairly balanced.
I plan to. My asset allocation is not yet fixed. Once it is, I'll probably check at least once a month if I need to rebalance, but I'll use wide bands so only very large changes would trigger actual rebalancing.
I'm not yet sure if I'm going to use Harry Browne's permanent portfolio. But I like the way many only rebalance theirs whenever one of their assets grows to 35% or drops to 15% (initially they're 25% each).
I'm not yet sure if I'm going to use Harry Browne's permanent portfolio. But I like the way many only rebalance theirs whenever one of their assets grows to 35% or drops to 15% (initially they're 25% each).
Thanks Robert for the explanation!
I'm just started working on my investments, as I'm reading the book "$ave smart, earn more" by Dennis Blits.
Funny enough, I read this morning about rebalance
He mentioned that can be done based on % difference (ex. 5%) or on a time basis (ex. every 3 months)
Thanks!!
D
I'm just started working on my investments, as I'm reading the book "$ave smart, earn more" by Dennis Blits.
Funny enough, I read this morning about rebalance
He mentioned that can be done based on % difference (ex. 5%) or on a time basis (ex. every 3 months)
Thanks!!
D
I will rebalance when I have more to rebalance.
For now it's a case of bringing the lagging asset class up to where it needs to be, ie my equities portfolio, which I'm selecting for dividend yields (after due diligence, of course). This will also be balanced wrt its components, 10-20 individual stocks with appropriate sector diversification, possibly a little overweight towards exposure to energy (trad and alt), as I think with peak oil, the only way is up, there.
For now it's a case of bringing the lagging asset class up to where it needs to be, ie my equities portfolio, which I'm selecting for dividend yields (after due diligence, of course). This will also be balanced wrt its components, 10-20 individual stocks with appropriate sector diversification, possibly a little overweight towards exposure to energy (trad and alt), as I think with peak oil, the only way is up, there.
I don't rebalance actively. Only when contributing "fresh money" to my portfolio I do this according to my target asset allocation.
See http://www.earlyretirementineurope.com/ ... ncome.html for details.
See http://www.earlyretirementineurope.com/ ... ncome.html for details.