Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Rebalance Stock Allocation?
Old 12-28-2014, 12:44 PM   #1
Dryer sheet wannabe
Join Date: Dec 2013
Location: Summerville
Posts: 15
Rebalance Stock Allocation?

I currently have my 401k 100% invested in stocks. This is a conscious decision due to my age, pension, and defined contribution plan. My 401k stock allocation has drifted from my initial allocation of:
50% Russell 1000
20% Small Cap
20% International MSCI EAFE
10% Emerging market
I understand the need to rebalance to keep stock and bond allocations at the appropriate AA percentage. However since I am at 100 % stock is there a need to rebalance the individual stock percentages or should I leave them alone? Domestic stocks have done well this year while international stocks have struggled. I anticipate that this will change and I am not trying to time the markets. My desire is to have well diversified portfolio using index funds with low fees....

Yellowjacket is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-28-2014, 01:11 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 13,018
If you are interested in a diversified stock portfolio then, yes, you should rebalance to your target AA.

Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is offline   Reply With Quote
Old 12-28-2014, 01:55 PM   #3
Thinks s/he gets paid by the post
Join Date: Jul 2005
Posts: 3,805
I'm also 100% equities, and yes I have a target AA and rebalance to it. Rebalancing with all stocks actually works "better" than rebalancing between stocks and bonds. An all stock portfolio has a bunch of different types of stocks that hopefully will behave differently but still have the same expected long-term returns. By rebalancing, you sell high and buy low and can add a percent or so a year (so I have read) to your returns. Again, that's long-term average. Bonds have a lower expected return, so rebalancing between stocks and bonds is more about risk management than maximizing performance.
Animorph is offline   Reply With Quote
Old 12-28-2014, 02:30 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jun 2005
Posts: 7,662
Presumably you picked that initial asset allocation for a reason, so unless the reason has changed, why wouldn't you rebalance back to it if your portfolio has strayed far enough away from it? If your portfolio hasn't strayed far enough away, then no need to rebalance.

An Investment Policy Statement that you wrote down back when you first started with this asset allocation should help you decide what "stray far enough away" means.
LOL! is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
How often to allocation funds rebalance? Rich_by_the_Bay FIRE and Money 1 05-08-2006 06:10 PM
Poll: How often do you rebalance your portfolio? Lusitan FIRE and Money 7 05-06-2006 11:51 AM
When does FireCalc 'rebalance' ?............... Cut-Throat FIRE and Money 3 04-07-2006 11:26 AM
How Often to Rebalance Portfolio? Gearhead Jim FIRE and Money 7 10-22-2005 09:06 AM
How to rebalance with tax-deferred accounts? soupcxan FIRE and Money 6 11-22-2004 02:06 PM


All times are GMT -6. The time now is 05:44 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.