- Rebalancing asset allocations
- How to rebalance your portfolio
- When should you rebalance your portfolio?
- Factors that may influence how and when you rebalance
- Getting older? Admit it when you rebalance your portfolio
- Rebalance your portfolio for your benefit, not the tax man’s
- The simplest way to rebalance your portfolio
- Use threshold rebalancing to lower your portfolio’s risk
- Rebalance with new contributions to save on grief and cost
When deciding how often to rebalance your portfolio, you’ll need to consider several factors, including:
- The kinds of assets you hold
- The cost of trading such assets
- Tax issues
- The free time you have available
- Your personal judgement
- How often you can be bothered to do it
I’m serious about that last point, incidentally.
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The bank has a new product called the Abbey 5% ‘Home Saver’ Account that at a glance looks ideal for any saver who qualifies.
It certainly beats the UK government’s approach to helping people into the housing market, which amounts to supporting homeowners who over-stretched themselves (although happily to no great affect so far).
Here are the key details:
Every week I read a large number of personal finance and investing articles. Here’s my latest shortcut to the best.
- Rebalancing asset allocations
- How to rebalance your portfolio
- When should you rebalance your portfolio?
- Factors that may influence how and when you rebalance
- Getting older? Admit it when you rebalance your portfolio
- Rebalance your portfolio for your benefit, not the tax man’s
- The simplest way to rebalance your portfolio
- Use threshold rebalancing to lower your portfolio’s risk
- Rebalance with new contributions to save on grief and cost
Once you’ve committed to rebalancing your portfolio to maintain your chosen asset allocation, you need to decide when you’ll do the deed.
As usual, I’m definitely not going to give you a precise plan on how often you should rebalance. I think there’s no perfect answer, and you need to decide for yourself.
That said, the rest of this post will look at the main approaches to deciding how often you’ll rebalance.
Rebalancing at regular time intervals
There are arguments made for rebalancing from every period from daily to monthly to once-a-decade.
- Rebalancing asset allocations
- How to rebalance your portfolio
- When should you rebalance your portfolio?
- Factors that may influence how and when you rebalance
- Getting older? Admit it when you rebalance your portfolio
- Rebalance your portfolio for your benefit, not the tax man’s
- The simplest way to rebalance your portfolio
- Use threshold rebalancing to lower your portfolio’s risk
- Rebalance with new contributions to save on grief and cost
I have previously discussed why rebalancing your portfolio is a good idea. In short, by reducing or adding to your holdings in different asset classes, you can smooth your returns and keep risk within a level you can tolerate.
How do you actually do it? Well, rebalancing is definitely an art more than a science.
We’ve talked before about how there are no rules for constructing the perfectly diversified portfolio – unless you believe in utterly efficient markets AND you know yourself better than a Zen master and so can anticipate your reaction to any kind of market conditions!
Equally, there’s no perfect method of rebalancing. But there are definitely factors you should keep in mind.
Hence this series on how to go about rebalancing your portfolio.
Make sure you’ve read that first post on why you should rebalance, and please do subscribe or bookmark this site to get the rest of the series.
For the rest of this article, we’ll discuss the crucial decision you must make before rebalancing.
