How often should you rebalance?

Wobblydeb

I'm just debating rebalancing my investments more frequently than I do at present. [which is random at the moment, anything from every few months to 1-2 years].

I thought about doing it at the end of each month. But wondered if this meant I wouldn't be leaving the winners to run up profits.

I've seen too many times where my profits evaporate as the market turns, so monthly doesn't seem like such a daft idea after all.

What are your thoughts?

{Note - I am talking funds here, so no cost to buying/selling other than time out of the market}

Linton

A reasonable timeframe I think is once a year, and then only where the changes exceed some threshold of say £2K or more depending on the size of your portfolio. Excessive rebalancing means you are continually moving relatively trivial amounts of money around to little overall benefit.

It's best if you do it on a predetermined regular basis as it keeps your emotions out of the equation.

jamesd

Between one and four times a year. Too often is not as beneficial. There isn't agreement about any specific number, just sometimes good and too often less beneficial.

AnotherJoe

I'm attempting to get to yearly as i retire. Time will tell.

Keep_pedalling

We do it once a year, at the beginning of the financial year. This is tied in with with bed and ISA our full allowance, and trying to use up a good chunk of our capital gains allowance.

Once everything is in an ISA wrapper we might go a little more ad hoc, but for the next few years we will stick to the annual plan, which so far has worked out very well.

EdSwippet

Maybe consider threshold rebalancing? I use this, and I have needed to rebalance no more than twice so far, over close to a decade.

ChopperST

Quarterly wins in this article - http://www.marketwatch.com/story/the-right-way-to-rebalance-your-portfolio-2014-02-18

redux

Surely if one geographical area or speciality outperforms for a while, it will then have a greater proportion in any world index or average, so I'm surprised to see people doing rebalancing as often as mentioned above.

JohnRo

Monthly, with new ISA allowance money and dividend income to combine three aspects, capital deployment, avoidance of minimum platform charges and a rolling allocation maintenance scheme.

I have a large number of IT holdings so it can be as long as two years, or more in theory, before any one of them is next adjusted.

dunstonh

I like annually. Do it too often and you dont benefit from the volatility as much. We ran a portfolio through FE analytics a few years back and found annually was optimal.

ischofie1

Once a year for me.