Rebalancing 401k and IRA
How often do you rebalance 401k and/or IRA? What strategy do you use?! Thanks!
Reddit may have some good thread about this
Quarterly, using the technique in The 3% Signal. It's a simply planned version of value averaging investing for people who don't want to just invest and forget (even though that's the best option for most people). The general idea is that the data we have, while it can't predict the future directly, indicates the market can't sustain greater than 3% growth per quarter, so when it currently is, it's trending toward over priced, and you should shave off excess to have reserves in more stable investments. When the market slows or drops, you use those funds to buy more stock "at a discount." It's a pretty interesting book and the ideas have a fair bit of academic backing. I'd recommend checking out the book and deciding for yourself if it's for you.
Cool thanks for the tip. Will definitely check it out!
I agree, quarterly is the way to go.
A friend introduced me to Blooom which does auto rebalancing for 401K accounts. I am pretty happy with it. It rebalanced in such a way that the overall expense ratio is minimized too.
What has been your YTD return?
I am seeing around 12% for last two years average
Assuming you're young and have invested in 1-3 index funds that capture a significant portion of the market (total stock market index, international stock index), what's the need for rebalance even once a year ?
What if you start off with 75% total stock market and 25% international, but after a year the former grows to 90% of your portfolio? Maybe you’d want to rebalance back to 75/25
That's true.
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