Investing guidance is to rebalance with some regularity, which should both keep the portfolio at your level of “risk” (well volatility) tolerance, AND increase returns for risk level if asset classes are not well correlated (forcing some degree of selling high and buying low over time).
I know this yet somehow never get around to actually doing the rebalancing.
Do the rest of you do better?
I just call my broker every year-ish and ask him if I’m topheavy in anything, then he gives me guidance on what to buy/unload. Or just does it for me. More the latter lately since I retired and moved everything into my brokerage.
Yes, but I work in the industry. My risk tolerance has definitely decreased recently
While I meet with my financial advisor to re-balance every quarter, he is always looking to see if changes need to be made, and he has my proxy to make changes he deems necessary to keep things in balance. When I was married there was a lot more money to manage, but now that I’m single, not as much to worry about.
Yes. My 401k rebalances automatically bi-annually, and I manually rebalance my IRAs annually.
I just had my regularly scheduled quarterly meeting with my financial advisor today, and this was one of the topics we discussed. Being retired my risk tolerance is fairly low, but I still want to maximize my income in case of unexpected medical expenses.
There are only so many ways you can stack Nickles and Dimes.
Every year in early January.
My wife and I review our portfolio as of Dec 31. We then make the necessary changes to get to our new target split between domestic stocks, international stocks, REITs, bonds and treasuries.
We never look at or discuss our financial position for the rest of the year. There have been times when we’ve been sorely tempted (2008 and COVID) but we resisted the urge to open up the books.
This. There’s a book I bought years ago, “The Intelligent Asset Allocator”, that explains the rationale for distributing your wealth among uncorrelated assets, and then rebalancing just once per year to restore your target allocation percentages. Great book for beginners, it starts with simple thought experiments involving series of coin tosses, shows the performance of various asset allocations using real market data from the last 100 plus years, and works up to efficient frontier theory and rebalancing concepts.
I was a pre-med student in the 1980s. On a lark I took a few investment classes (okay a girl was involved 
I fell in love with Investment Project Evaluation and Efficient Portfolio Frontier. Got nowhere with the girl. Ended up with a Finance degree.
The two tools gave me a satisfying and rewarding career and a nice portfolio (It helps that I met any married a girl who is a saver).
My uncle told me at age 15 that the two most important decisions you will make in the next decade are what career you will pursue and who you will marry. Turns out the old fart was right again. He was also right about, “don’t lead into a ten-ace and don’t bid five of a minor”
I look at it ~ daily. Since we are nearing retirement our financial adviser (just got one, long story) said she will be making recommendations.
Annual is enough for my wife and me. Anything more than that is trying to game the system with guesses.
Has anyone experienced much rebalancing regret? Looking back wistfully at how well you would have done if you had let it ride?
My portfolio has been cash since the first Trump administration. Less money, but less stress, and I don’t need more of either one.
A good question.
Part of the problem is rebalancing portfolios can trigger capital gains - although tax on adjusted cost base changes is inevitable, so this works out to be a matter of timing.
In Canada, recent changes have increased capital gains charged above a certain value. There is speculation a change in federal government might reduce some of the extra costs from these changes. It may make sense to reduce equity exposure given forthcoming turbulence. But it also makes sense to wait to see whether a new government has a different approach to capital gains.
I’ve always been fairly disciplined in sticking to basic investing advice for beginners, and I think over the long term I think it has worked out for me.
So for me it isn’t so much regret as fantasizing. What if I had sold before the dotcom bust? Or the 2008ish bust? Now that I’m more conservative with my portfolio, it’s the opposite, in boom years I might fantasize what if I had just left everything in the nasdaq 100. But of course that’s trying to time the market and is a bad idea.
It’s like putting $5 on red at the roulette table and winning. What if I had emptied out my checking account at the ATM and put my mortgage payment on red. I would have won a lot more!!!
I do all rebalancing in tax deferred accounts.
My husband looks at the books quarterly, and rebalances when things get out of whack. Usually about once a year.
No. It’s true that rebalancing means selling the thing that’s been doing well, and yes, sometimes it keeps doing well. But thems the breaks. I don’t believe i can time the market. And once rebalancing saved us a nice chunk of change in an asset that crashed shortly after we sold.
But mostly i think you just can’t get too invested in every decision. Set a strategy and stick with it. Otherwise, you may not be able to eat well OR sleep well.
We give my adult daughter a yearly gift for her Roth IRA, which I set up for her awhile back. The Roth is split between two mutual funds (Vanguard Extended Markets and LifeStrategy Growth). I tell her to add the money to whichever fund is lower.
It’s a half-assed balancing strategy that’s easy for her to remember.
For myself, I let things ride unless I’m feeling uneasy, and then I’ll put about 1/3 of my assets (stock mutuals or ETFs) into things that feel safer. That happens every 3 to 5 years, most recently when there was a big push to raise minimum wages — went to gold mining and inflation protected funds and “market timed” things very well.
Underperforming the market isn’t much of a concern for me — I lean toward value, and wouldn’t feel good counting on the high flyers (notably Tesla) to keep soaring.
Wait…so just cash in someone else’s mattress? No interest? (not criticizing, just curious)
We’re t-minus 5 years til retirement, IRA is actively managed by my retirement guy(s company)…the 401k just got rebalanced from a 2035 retirement fund to 2030…and I’m amazed (and terrified) how I can stare at my phone, push a button, and redirect that much money without so much as a phonecall. Sure…it’s the registered device, and it’s a password and my face geometry and a number texted to the phone…but still.