I would be very careful of rebalancing as a rote act. You can be moving money from well performing assets to poor performing assets. Rebalancing is the technique used by some advisers, Rhe real reason some advisers use rebalancing is that when combined with diversified holdings, it avoids taking too bad of a hit with bad choices. The problem with it is that it can really hurt the performance of some of your holdings.
Few things to think of:
Where do you think the market is heading?
What is your risk tolerance?
How long can the money be tied up for investing?
This is bad advice and totally misses the point of rebalancing in the fist place.
Statements like "you can be moving money from well performing assts to poorperforming assets" suggests that you should attempt to time the market.
Rebalancing is not a timing mechanism. It suggests that you stick to a strict aset allocation. Best bet ona small portfolio is that you rebalance once a year, larger portfolios might go every 6 months. I would make sure that if you have some losses that you may wnat to consider booking those losses for tax purposes. Please remember if bought back within 31 days there is a wash sale rule that negates this.
Rebalan cing and dollar cost averaging are 2 strategies. There are advisors our ther who will argue against this. William O'Neil would suggest that concentrated positions in winning sectors backed with stop losses of 7% to be a more effective strategy.
To me there is not a right or wrong strategy. It is like east coast offence or west coast offense. The trick is to find one that works and stick to it.
I would suggest reviewing your portfolio every 6 months and rebalancing once a year. Take some money off the table for your winners adn realize that the losers are getting cheaper. Find comparable ETF and Mutual funds so you can book your losers for tax loss and simutaneously keep you portfolio dicsipline.
Ray, thanks for the input. I handle my money myself and am not about to try to time the market. I just keep reading in Money (i know, i know) that you should rebalance once a year. I haven't done that yet, but was thinking this might not be the ideal time for that. Thanks again.
Just be methodical. If you rebalance last year at this time, do it again this year. Pick something and stick to it.
I personally think that it is easier with the creation of ETF to manage and maximise tax loss.
For instance you own Cohen and Steers Real Estate Mutual Fund CSRSX. You are down 3000 in December. You like have this as part of a diversified portfolio. You sell this and book the tax loss but you cover yourself by buying the ETF ICF.
I would be very careful of rebalancing as a rote act. You can be moving money from well performing assets to poor performing assets. Rebalancing is the technique used by some advisers, Rhe real reason some advisers use rebalancing is that when combined with diversified holdings, it avoids taking too bad of a hit with bad choices. The problem with it is that it can really hurt the performance of some of your holdings.
Few things to think of:
Where do you think the market is heading?
What is your risk tolerance?
How long can the money be tied up for investing?
This is bad advice and totally misses the point of rebalancing in the fist place.
Statements like "you can be moving money from well performing assts to poorperforming assets" suggests that you should attempt to time the market.
Rebalancing is not a timing mechanism. It suggests that you stick to a strict aset allocation. Best bet ona small portfolio is that you rebalance once a year, larger portfolios might go every 6 months. I would make sure that if you have some losses that you may wnat to consider booking those losses for tax purposes. Please remember if bought back within 31 days there is a wash sale rule that negates this.
Rebalan cing and dollar cost averaging are 2 strategies. There are advisors our ther who will argue against this. William O'Neil would suggest that concentrated positions in winning sectors backed with stop losses of 7% to be a more effective strategy.
To me there is not a right or wrong strategy. It is like east coast offence or west coast offense. The trick is to find one that works and stick to it.
I would suggest reviewing your portfolio every 6 months and rebalancing once a year. Take some money off the table for your winners adn realize that the losers are getting cheaper. Find comparable ETF and Mutual funds so you can book your losers for tax loss and simutaneously keep you portfolio dicsipline.
Ray, thanks for the input. I handle my money myself and am not about to try to time the market. I just keep reading in Money (i know, i know) that you should rebalance once a year. I haven't done that yet, but was thinking this might not be the ideal time for that. Thanks again.
Just be methodical. If you rebalance last year at this time, do it again this year. Pick something and stick to it.
I personally think that it is easier with the creation of ETF to manage and maximise tax loss.
For instance you own Cohen and Steers Real Estate Mutual Fund CSRSX. You are down 3000 in December. You like have this as part of a diversified portfolio. You sell this and book the tax loss but you cover yourself by buying the ETF ICF.
Just one example. Good Luck