Originally Posted by Bankerwithabrain
I can't believe nobody on these boards struggles with the same issue!
Or some of us post less than others
What I do is take chances with small portions of the money.
For example if an allocation is supposed to be:
75% domestic/ 25% foreign
45% large cap/15% mid cap/15% small cap/15% foreign large cap and 10% foreign small cap
(100% equity across the board).
How many ways can you create that allocation? It is infinite.
Some of us buy the large cap fund and put 45% in it. Find the mid cap fund, 15% there etc...
I do that with 95% of our assets- my 401k, my Roth, my rollover- each each account has the 45-15-15-15-10 allocation in it.
My wife's 401k also has same allocation.
My wife's Roth and rollover DO NOT follow above. They are 75-25 (domestic-foreign) and also 45% large and similar. But I construct it MUCH differently. I construct it with sector funds. A tech fund, a natural resources fund, a financial services fund, a health care fund etc...
My wife's IRAs are less than 25% of the money invested (it might be 5%, 10% on a really good day).
I make decisions on what to BUY, but I rebalance this account very little (I do not sell much). I can generally rebalance with a years worth of contributions ($5000). I do not have a sector allocation- if I want 50% of the account in tech, 50% will be in tech. I focus on the xray more than the fund allocation (meaning the tech fund owns some large caps and lots of mid/small caps, the financial services owns more large caps and less small caps). I just analyze by xray only and make sure the portfolio never has more than 45% large cap domestic and no more than 25% foreign, and I am coming real close to what target needs to be in that regard.
I generally buy what is down (in 2008 I was buying real estate fund and financial services fund). Now I am focusing more on health care (lagged in 2009) and technology.
If I find a sector which does bad, that is usually the one I buy because it means it is lower than the others and will recover faster (financial services for me between 2008-mid 2009 nearly doubled).