This is the third and the final part of Rebalancing series. Previously (here and here), I have checked how often one should rebalance an investment portfolio for a traditional 60% stocks and 40% bonds portfolios as well as for a multi-asset, broadly diversified portfolio. In both cases, annual rebalancing performed better than semi-annual and quarterly. Today, I am going to analyze a predetermined threshold rebalancing method and summarize which rebalancing method works best … [Read more...]

Last week, I quickly touched what rebalancing is and what methods of rebalancing are out there. In addition, I checked a time-based method for a traditional 60% stocks and 40% bonds portfolio. As a quick refresher, the time-based method assumes rebalancing on a periodic schedule, for instance, on a monthly, quarterly, semi-annual, or annual basis. You can do it even daily, if you want to. It all depends on your preferences. … [Read more...]

You have probably heard a term “rebalancing” multiple times. Financial pundits and investment experts continue to pinpoint that this is one of the key elements of successful investment process. There is little to argue with and you will see soon why you should do it. Before I run the numbers, let’s briefly define what rebalancing is and what methods of rebalancing exist. … [Read more...]