portfolio rebalancing pain points

“What's the proper way to rebalance portfolio from stocks to bonds as I get closer to retirement?”

“Does this mean I'm supposed to buy less stocks and buy more bonds, or am I supposed to sell the stocks I own and buy bonds with the profits?”

“How do you rebalance your portfolio?”

“Is active rebalancing of my portfolio necessary? Do I have to sell my "Winners"? Or can I "buy in" to poor performing funds?”

“If your incoming cash to the portfolio isn't enough to rebalance it then you must actively rebalance occasionally. If your portfolio deviates too much from your asset allocation then you need to rebalance. Otherwise you are not taking on the correct amount of risk.”

“If it’s a taxable account, how you complete this may impact your tax bill.”

“If it is in a brokerage the best method is to just start putting contributions in bonds. You don't want to sell the stocks and trigger a taxable event while you also have income coming in.”

“Curious, how does withdrawing from the surplus asset class minimize taxable events? I was reading your advice as… if your stocks are outperforming your bonds in a given year then withdraw from stocks to effectively rebalance. However wouldn’t you then be paying capital gains and not necessarily minimize taxable events?”

“In a taxable account selling will trigger taxes.”

“I would suggest _not_ re-investing dividends directly, but instead combine that with new funds you'll be adding to the account in order to bring it back to your desired balance, and I suggest doing this whenever you are buying fresh funds within the account (even if it's only with the fresh dividends).”

“If that becomes too stressful or bothersome, you can also switch to Target Date funds and simply let the fund do the rebalancing for you.”

“I get target date funds from a management / effort point of view. But from an actual money point of view? If the fund itself is selling assets to buy bonds...you'll pay those taxes regardless. So now I'm just adding a management fee on top of the taxes? I don't see the benefit other than pure laziness or intentional ignorance.”

“Vanguard doesn't seem to provide any rebalancing tools (vs. on HealthEquity, it's just one click.) Do you rebalance it manually, or use a specific brokerage to automate that?”

“This is what I've been doing but as my portfolio grows I find it harder to keep every thing in line.”

“It took me a while to figure out a good method of rebalancing across multiple accounts.”

“I get target date funds from a management / effort point of view. But from an actual money point of view? If the fund itself is selling assets to buy bonds...you'll pay those taxes regardless. So now I'm just adding a management fee on top of the taxes? I don't see the benefit other than pure laziness or intentional ignorance.”

“I've been using a rebalancing app for a month and a half and it has underperformed Hodling bitcoin by about 50%.”

“It just seems pointless when it performs the same or worse than other diversified funds and has higher fees”

“I liquidated my Intelligent Portfolio yesterday - after 3 years of terrible performance”

“The old formulas are prolly not going to serve younger people that well - mainly in that health outcomes are likely to improve so substantially that you're likely to live far longer than we are accustomed to and so going to bonds too early - absent sky high bond rates (10 plus percent) will aid you in running out of money when you're 87 and then you have a real bad time because you might have a decade left.”

“Old wives tale! Look at 20 year stock vs bond return and std deviation. If you live 20 years after retirement bonds aren't helpful. Sequence of returns blah blah blah. Keep growing your money...”

“This. I just ran a bunch of scenarios with market returns going back to 1929. Basically there are only a few years where bonds helped. In basically every case more than 30% bonds provides worse outcomes as you give up too much returns and retirement really isn’t a short term need. In most conditions 100% equities was the best allocation. Most will need 25-30 years in retirement.”

“Is active rebalancing of my portfolio necessary?”

“DON'T SELL YOUR WINNERS. Sell your losers and keep the winners. Selling your winners and keeping your losers is like going into your garden and plucking out the grass, while keeping the weeds.”

“I want to make sure I have items in tax-sheltered accounts that need to be (bonds, REITs, etc).”

“FutureAdvisor was trying to get me to hold REITs in taxable accounts and also to buy VTIP in a taxable account which seems nuts.”

“How is their asset location? If it’s a long term portfolio better to have most of their equities in Roth and also taxable brokerage so they can take advantage of tax losses, LT cap gains and potential for step up in basis when they pass.”

“If not, it’s an easy rebalance since they can sell the equities in their pre tax IRA or annuity and then sell the bonds in their taxable accounts since they probably don’t have significant gains.”

“Rebalancing individual stocks isn't a great idea for the reasons you outlined. Rebalancing among *uncorrelated* asset classes is what the pros are talking about.”

“The idea isn’t that you’re strangling your flowerbed. It’s that by keeping a position in SGOV you minimize the max your account can both grow and fall, and have excess capacity to take advantage of a recovery by reallocating SGOV to VOO.”

“You are being completely tone death to reading the room. Gambling on single stocks cool, but don't act like that is the same deal with what the room is referring to in having an actual diversified portfolio outside a single stock ffs.”

“You are being completely tone death to reading the room. Gambling on single stocks cool, but don't act like that is the same deal with what the room is referring to in having an actual diversified portfolio outside a single stock ffs. You have a gambling deal on the side of the portfolio on a single stock. Okay cool whatever. Stop acting like you're doing some crazy "rebalance" when in reality you're just gambling with a single stock on the side sheesh.”

“Do you have any operational principles that you religiously follow? E.g. rebalancing on the first day of every quarter, making changes only when the current ratio deviates by more than X bp, etc.”

“I look at it once a month and only rebalance if anything is more than 20% out of whack. For example if something should be 50%, I rebalance if it gets to 40 or 60.”

“What frequency do you use to rebalance as the current value keeps changing throughout the year? And sometimes there would be sharp changes within a month as well.”

“I have a phone reminder for every 6 months that reminds me to do a rundown of my position and rebalance if necessary.”

“I rebalance mine every time the percentages get more than 5% off of my desired asset allocation, or every year on a schedule.”

“Isn't rebalancing selling your winners and keeping your losers?”

“Feels like some people forget the old adage of buy low, sell high”

“Buffett's favorite line (from Peter Lynch) is: selling your winners and holding your losers is like cutting the flowers and watering the weeds”

“Rebalancing is protecting you from being overweight on yesterday's winners when they become today's losers. It also positions you well when yesterday's losers become today's winners. Look at the history of the stock market..this happens pretty consistently.”

“Ah, the old "buy high, sell low" method. Foolproof.”