Rebalancing Your Portfolio: Why, When, and How

You’ve decided on the perfect asset allocation for you. It matches your risk tolerance, preference for domestic versus international equities, and the numbers, as expressed in percentages, are perfect multiples of ten.

[{"selector":"#anim-957c94c7-1cc2-4bd0-809f-719a63b2445c","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-de18ad52-894f-482e-95c0-2ae503b71d90","keyframes":{"transform":["translate3d(-125.09091%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Read More

[{"selector":"#anim-dbdd4410-f603-4e3b-b9e9-2e965909b4bf","keyframes":{"opacity":[0,1]},"delay":0,"duration":2400,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-61f44526-d741-4845-b4fe-8081328111f0","keyframes":{"transform":["translate3d(0px, -99.4978%, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":2400,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] You’ve got a spreadsheet to automatically track and calculate those percentages. 60, 20, 10, 10. It all adds up. Then the market does what the market does and it’s all fouled up. 58, 21, 13, 8. No!!!! Read More

All is not lost. You can rebalance. Dr. Jim Dahle explains why you might want to do that (besides making the numbers look proper again), when you might want to do that, and of course, how.

[{"selector":"#anim-da0e154f-c606-4b86-bcd3-46b4d5c934b8","keyframes":{"transform":["translate3d(105.23416%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":4000,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-2a4163e8-6669-473f-b3a7-aa273a312bea","keyframes":{"opacity":[0,1]},"delay":0,"duration":4000,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-7286064f-5fcc-4032-a041-8c32bd48686d","keyframes":{"transform":["scale(0.15)","scale(1)"]},"delay":0,"duration":4000,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"forwards"}] Read More

Rebalancing Your Portfolio: Why, When, and How

Returns the portfolio to the desired amount of risk.

[{"selector":"#anim-cd329f1e-a70e-40a3-a315-8bff3e7870c3","keyframes":{"transform":["translate3d(107.71349%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":4000,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-9f22169f-c3ec-4cca-946d-04beb2775ae3","keyframes":{"opacity":[0,1]},"delay":0,"duration":4000,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-c9fe9395-6497-49c0-bab4-d9e0bb363747","keyframes":{"transform":["scale(0.15)","scale(1)"]},"delay":0,"duration":4000,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"forwards"}] Read More

Forces you to buy low and sell high, although in general, this one is a bit of a myth.

[{"selector":"#anim-6663e640-7687-4275-8988-d99cb56db7d1","keyframes":{"transform":["translate3d(105.23416%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":4000,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-f4ae50cb-3538-4b9f-8f4d-f8367148fd71","keyframes":{"opacity":[0,1]},"delay":0,"duration":4000,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-6b1f2aac-f156-4df5-8ca9-084d8fda1b60","keyframes":{"transform":["scale(0.15)","scale(1)"]},"delay":0,"duration":4000,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"forwards"}] Read More

Since most of the time “high-expected return” assets like stocks actually have higher returns, selling a high-expected return asset class and buying a low return asset class probably lowers overall returns, despite any “bonus” from buying low.

[{"selector":"#anim-d0ba6ead-edcd-4389-8f4e-504edde048c8","keyframes":{"transform":["translate3d(107.71349%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":4000,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-bb5bf53c-3a0f-4623-b748-b567757b81b8","keyframes":{"opacity":[0,1]},"delay":0,"duration":4000,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-00fcb356-eafe-40a7-888e-7d3951670df3","keyframes":{"transform":["scale(0.15)","scale(1)"]},"delay":0,"duration":4000,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"forwards"}] Read More

3) Something to Do

[{"selector":"#anim-d74f9e66-e5bb-4c98-9625-739c98564b82","keyframes":{"transform":["translate3d(105.23416%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":4000,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-234e4c66-c8e0-407c-970f-6efa0b095876","keyframes":{"opacity":[0,1]},"delay":0,"duration":4000,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"both"}] [{"selector":"#anim-4727e47c-5b19-40f1-a6f1-e56475674b92","keyframes":{"transform":["scale(0.15)","scale(1)"]},"delay":0,"duration":4000,"easing":"cubic-bezier(0.4, 0.4, 0.0, 1)","fill":"forwards"}] Many investors have a curious need to tinker with their portfolio. I literally only mess with my parents’ portfolio twice a year. First, to rebalance and second, to take a Required Minimum Distribution (RMD) out of the portfolio. Read More

SWIPE UP NOW TO READ MORE

[{"selector":"#anim-73bccf1c-50ed-4d94-a4b7-aefe0601466a","keyframes":{"opacity":[0,1]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] [{"selector":"#anim-2f9e1bd4-c9f0-4dda-a54f-2a723a8276a0","keyframes":{"transform":["translate3d(-116.50794%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":600,"easing":"cubic-bezier(0.2, 0.6, 0.0, 1)","fill":"both"}] Read More

Rebalancing Your Portfolio: Why, When, and How

You’ve decided on the perfect asset allocation for you. It matches your risk tolerance, preference for domestic versus international equities, and the numbers, as expressed in percentages, are perfect multiples of ten.

All is not lost. You can rebalance. Dr. Jim Dahle explains why you might want to do that (besides making the numbers look proper again), when you might want to do that, and of course, how.

Rebalancing Your Portfolio: Why, When, and How

Returns the portfolio to the desired amount of risk.

Rebalancing Gives the Investor Three Things 1) Risk Control

Forces you to buy low and sell high, although in general, this one is a bit of a myth.

2) Rebalancing “Bonus”

Since most of the time “high-expected return” assets like stocks actually have higher returns, selling a high-expected return asset class and buying a low return asset class probably lowers overall returns, despite any “bonus” from buying low.

3) Something to Do

SWIPE UP NOW TO READ MORE

MORE STORIES