31 Dec Annual Rebalance

Flobberchops

Yes, sad to say I have been looking forward to creating a new Excel spreadsheet much more than any New Year celebration!

I tend to rebalance on an ad hoc basis but it's been instructive looking back at the year's finances and comparing to 2016.

capital0ne

Linton wrote: »

Calculating tax isnt a problem, MS Money can produce reports of tax related transactions.

The complication is that I run 3 separate portfolios, Growth, Income and Wealth Preservation spread across 4 accounts (his & hers SIPPs and ISAs). These are managed as a single entity. I dont treat the ISAs and Sipps or His and Hers separately, a particular Growth or WP fund for example could be held in any of the accounts. Under these conditions if one doesnt take care one eventually ends up with bits of every fund in every account. To avoid this I may sell a fund in one account and buy the same fund in another to consolidate holdings.

Rebalancing isnt a matter of keeping fund %s constant but rather managing the total assets held in each of the 3 separate portfolios in line with my objectives and keeping the asset allocation in each portfolio roughly constant.

Like I said dead easy with a spreadsheet

You could get really advanced and write a nice little app using a proper db and a few functions to do this for you.- not beyond anyone with a little Python/PHP/Java skills, just pick your weapon and start coding!

DairyQueen

I am.

I have spent a good part of this year reviewing pensions and investments and now (I hope) I'm on the home stretch. I prefer to review at end of calendar year as I have the time to do so, and it's easier to check performance based on calendar years.

I'm more bullish on equities than you. I'm also more negative on gilts. The current distribution is therefore 69% equities, 21% corporate bonds, and the balance (10%) in cash - destined for equities. Some of the latter is being transferred from SIPP to ISA to use-up this year's personal allowance. I shall repeat the exercise after the end of this tax year but intend keeping the equity/fixed percentage at around 80/20. Having said that, like you, I'm also a tad concerned about some market valuations - notably the USA (on which I have a largish exposure). I have decided to take a sanguine view and hope that any trump-precipitated crash will have recovered by the time I need to enter drawdown. The US is in pretty good shape economically but his latest tax cuts will increase the US deficit. 'Trickle-down' is not the panacea that corporate heads in ivory towers seem to believe exists as an economic solution to all ills.

I don't intend to enter drawdown for around 5/7 years - thus the emphasis on equities.

Alexland

Linton wrote: »

I dont treat the ISAs and Sipps or His and Hers separately, a particular Growth or WP fund for example could be held in any of the accounts.

I also manage my wife's pensions but am conflicted in which approach to take. On one hand it makes logical sense for her to take more risk for potential reward (as I might eventually have LTA issues and she is 6 years younger) and then I could take a bit less risk. However I worry she will get a statement one day showing the results of higher volatility. We are both a long way from being able to start drawdown anyway. As such we both take a similar risk profile which is slightly tweaked for market conditions.

Alex.

Thrugelmir

DairyQueen wrote: »

I have decided to take a sanguine view and hope that any trump-precipitated crash will have recovered by the time I need to enter drawdown.

Central bankers have been the driving force behind encouraging people to invest in riskier assets. Trump is very much pro business. Suspect that the iceberg lies elsewhere beneath the water.

DairyQueen

Thrugelmir wrote: »

Central bankers have been the driving force behind encouraging people to invest in riskier assets.

I don't disagree re: the part that QE has played in the move toward S&S investments. However, trump is simply repeating the fiscal policy adopted by Reagan. The US budget was in balance until the latter moved to cut corporate tax rates. This created the initial US budget deficit, It has simply increased ever since (and especially so under Republican presidents).

trump is a wild cannon. Who knows what kind of ridiculous action he could take that imperils global safety. The man is a first-rate eejit and I, for one, question the stability of the world's biggest economy in his (unsafe) hands.

Audaxer

Linton wrote: »

Calculating tax isnt a problem, MS Money can produce reports of tax related transactions.

The complication is that I run 3 separate portfolios, Growth, Income and Wealth Preservation spread across 4 accounts (his & hers SIPPs and ISAs). These are managed as a single entity. I dont treat the ISAs and Sipps or His and Hers separately, a particular Growth or WP fund for example could be held in any of the accounts. Under these conditions if one doesnt take care one eventually ends up with bits of every fund in every account. To avoid this I may sell a fund in one account and buy the same fund in another to consolidate holdings.

Rebalancing isnt a matter of keeping fund %s constant but rather managing the total assets held in each of the 3 separate portfolios in line with my objectives and keeping the asset allocation in each portfolio roughly constant.

Do you top up the Income, Wealth Preservation portfolios from the Growth portfolio each year, so that you rebalance the portfolios back to the same overall percentages?

talexuser

My only rebalancing is wondering whether to increase exposure to Europe which seems to be doing well.

Thrugelmir

DairyQueen wrote: »

The US budget was in balance until the latter moved to cut corporate tax rates.

Which budget was in balance? Projected Federal Government deficit for the current fiscal year is above $400 bn.

Are the 2 connected. Given that US corporations (who are far being alone) keep their profits offshore to avoid said taxes. At 35% hardly surprising.

Alexland

DairyQueen wrote: »

I'm more bullish on equities than you. I'm also more negative on gilts. The current distribution is therefore 69% equities, 21% corporate bonds, and the balance (10%) in cash - destined for equities.

I guess there is a little contrarian person in my brain who is allowed to allocate some of my money. The medium term gilt fund is down nearly 7% this year but it remains a good counterbalance against both currency movements and any corrections in the stock markets. Stock fundamentals are looking increasingly frothy and the faster they rise the greater the likelihood of a correction occuring. I am again baffled by some individual stock valuations which has historically been a good indicator of impending trouble.

The best result I can imagine for a UK investor in 2018 is that it will be a bit like 2015 with no significant market losses. I am not so negative to think it will be as bad as 2008.

Also rebalancing is all about boosting your stragglers, however mad it seems, to give them greater scope to shine in future.

Alex.