I'm just starting to build up my investments and I'm DCA into my funds. However, I'm wondering about how I should go about rebalancing.
As an example, I want to keep a 50%/50% split between domestic and foreign stocks. My domestic stock fund has been flat, but my foreign stock fund has taken off. The split right now has moved to 62% foreign/38% domestic.
Which would you do and why:
1. Sell enough of the foreign fund and move it to the domestic fund to get back to the 50%/50% ratio.
2. Temporarily stop contributing to the foreign fund and put my monthly investment into the domestic fund until I reach the 50%/50% split.
My preference is for the second option as I would prefer not to continue buying the foreign stocks at the higher price and put more money towards the (relatively) cheaper domestic stocks.
Am I missing something here?
Thanks.
As an example, I want to keep a 50%/50% split between domestic and foreign stocks. My domestic stock fund has been flat, but my foreign stock fund has taken off. The split right now has moved to 62% foreign/38% domestic.
Which would you do and why:
1. Sell enough of the foreign fund and move it to the domestic fund to get back to the 50%/50% ratio.
2. Temporarily stop contributing to the foreign fund and put my monthly investment into the domestic fund until I reach the 50%/50% split.
My preference is for the second option as I would prefer not to continue buying the foreign stocks at the higher price and put more money towards the (relatively) cheaper domestic stocks.
Am I missing something here?
Thanks.