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Rebalancing Portfolio
ChopperST
Posts: 1,260 Forumite
Just wondering what people do in terms of rebalancing their portfolio?
I have decided upon a quarterly rebalance of my various funds, ideally by buying more of those funds that are under my desired allocation % but switching where this is not possible.
However I am unsure as to whether to rebalance back to my original asset allocation % or leave a level of tolerance I am happy - with say 5%
Would be interested in what others strategies are?
I have decided upon a quarterly rebalance of my various funds, ideally by buying more of those funds that are under my desired allocation % but switching where this is not possible.
However I am unsure as to whether to rebalance back to my original asset allocation % or leave a level of tolerance I am happy - with say 5%
Would be interested in what others strategies are?
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Comments
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The whole point of rebalancing is to maintain your original investment strategy. I'm not even sure what the benefit of having a "tolerance of 5%" would be? Unless it's to minimise trading, perhaps laziness etc. In which case you should consider rebalancing less frequently than quarterly.
Usually 6-monthly rebalance is enough and I would maintain the original asset allocation. Review again when you want to lower/increase the risk.Stephen Covey once said that "when you teach once, you learn twice". That is the primary reason for my participation on the forums as an IFA.
Although I strive to provide accurate information in my posts, there may be the odd time when I fail. Yes I know it's hard to believe but even Your Hero can make mistakes. Apologies in advance.0 -
I have no need to minimise trading costs as I have none from my provider.
Certainly not laziness, I want to ensure I tinker enough to give the right return but not too much to be too short sighted.
These are the main sources for my strategy.
http://monevator.com/threshold-rebalancing/
http://www.marketwatch.com/story/the-right-way-to-rebalance-your-portfolio-2014-02-180 -
If you knew the perfect asset allocation it would be important to follow it closely....“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair0
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Haha thanks for that Glen but thats not what I'm professing here at all!0
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