Investing without Wall Street by Sheldon Jacobs

Author:Sheldon Jacobs
Language: eng
Format: epub
Publisher: Wiley
Published: 2012-02-15T16:00:00+00:00

4. Rebalance when necessary. Rebalance when you want more or less risk for any reason.

Here are some additional suggestions for rebalancing:

I think a younger person probably should rebalance. A worker nearing retirement age might be better off just riding with the smaller equity allocation when the market is down (but still rebalance when the market is high).

If you are engaging in a dollar-cost averaging program, use your periodic purchases to buy underweighted securities.

Rebalance with new money to save the expense of selling existing holdings with possible tax consequences.

Be more willing to rebalance in a tax-sheltered account.

Give priority to rebalancing high volatility securities.

Exclude illiquid assets such as art, or concentrated assets such as homes from your rebalancing.

You can use fund distributions to rebalance by taking the capital gains and dividend distributions in cash, and recycling them to where you are underweighted (including cash). This method, while producing modest results, eliminates extra transaction expenses and taxes, and is a quick, no-brainer phone call. It is best implemented in December when the funds are making their annual capital gains distributions.

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