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Old 03-28-2024, 09:36 AM   #21
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But my question is "isn't rebalance your AA also timing the market ?"
No. You rebalance to maintain your desired level of risk, not improve returns.
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Old 03-28-2024, 09:37 AM   #22
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Timing = Predicting. If you transact for a reason other than predicting the market, you are not timing the market.
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Old 03-28-2024, 09:53 AM   #23
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I understand people saying 'we don't time the market, but we rebalance our AA". ...
I think "market timing" is really an undefined term. Every decision to buy or sell is effectively a market timing decision. For example I moved some equity money to fixed income a few weeks ago, anticipating paying income taxes next month and real estate taxes in May. I made the sale as the markets were hitting new highs and thinking the euphoria might not last another couple of months. So that thinking could certainly be called market timing.

Even simple buys and sells, today, this week, next month, etc. are market timing too.

So I don't get too spun up about the small stuff. Moving a significant amount of a portfolio around in anticipation of market action is another matter entirely and probably merits a capital "m" and a capital "t."
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Equities Return are Stellar - should I withdraw some now or wait end of year?
Old 03-28-2024, 11:21 AM   #24
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Equities Return are Stellar - should I withdraw some now or wait end of year?

When I first retired (almost 15 years ago), each year I needed to withdraw some money from my portfolio for living expenses. So, I'd do that in early in the first week of January, right after doing my annual rebalancing. I only took cash from my dividends. I didn't try to market time but instead had strict rules for myself about when to rebalance and download the year's money from my portfolio, and how much to get.

Now that I am older, other income streams have come into play (as planned). I now have my "age 70 SS", my teeny-weeny mini-pension has kicked in, and I am taking RMD's too. All that adds up to more than I need to spend in a normal year, so I don't usually withdraw anything further from my portfolio these days.

I did withdraw $20K for a roof replacement and new hot water heater back in 2023, but did it the same way, right after rebalancing.

So, my suggestion is to make a hard-and-fast rule for yourself about what time of year you withdraw your usual spending money and how much. For many of us, choices lead to temptation to spend too much, but if you have a rule then you aren't operating based on choices.
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Old 03-28-2024, 10:02 PM   #25
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When I first retired (almost 15 years ago), each year I needed to withdraw some money from my portfolio for living expenses. So, I'd do that in early in the first week of January, right after doing my annual rebalancing. I only took cash from my dividends. I didn't try to market time but instead had strict rules for myself about when to rebalance and download the year's money from my portfolio, and how much to get.

Now that I am older, other income streams have come into play (as planned). I now have my "age 70 SS", my teeny-weeny mini-pension has kicked in, and I am taking RMD's too. All that adds up to more than I need to spend in a normal year, so I don't usually withdraw anything further from my portfolio these days.

I did withdraw $20K for a roof replacement and new hot water heater back in 2023, but did it the same way, right after rebalancing.

So, my suggestion is to make a hard-and-fast rule for yourself about what time of year you withdraw your usual spending money and how much. For many of us, choices lead to temptation to spend too much, but if you have a rule then you aren't operating based on choices.

Yes. RE-balancing at the same time each year isn't timing the market - just the re-balancing. You don't try to improve your gains or limit your losses - you try to keep your AA more or less constant.
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Old 03-28-2024, 10:12 PM   #26
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My idea of rebalancing is to sell the losers when I need money. I don't really have AA because we have mainly equities. Bonds are legacy from when our accounts were managed by ML and we have been selling them off whenever we need money.
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Old 03-28-2024, 10:59 PM   #27
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Definition of rebalancing:

https://www.investopedia.com/terms/r/rebalancing.asp

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Rebalancing refers to the process of returning the values of a portfolio's asset allocations to the levels defined by an investment plan. Those levels are intended to match an investor's tolerance for risk and desire for reward. [...]
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Old 03-29-2024, 04:03 AM   #28
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My idea of rebalancing is to sell the losers when I need money. I don't really have AA because we have mainly equities. Bonds are legacy from when our accounts were managed by ML and we have been selling them off whenever we need money.
That’s not rebalancing. When you rebalance you sell some of the winners and buy some more of the losers as needed to get back to your target AA.
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Old 03-29-2024, 08:19 AM   #29
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That’s not rebalancing. When you rebalance you sell some of the winners and buy some more of the losers as needed to get back to your target AA.
That's what I had said. We are almost 100 percent equities and we like the mix. We don’t rebalance.

Since Fidelity Retirement Planning tool shows that we will end up with a large portfolio, I see no need to change.
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Old 04-02-2024, 06:20 PM   #30
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I don't really have AA because we have mainly equities.
You may not have a traditional Stock/Bond AA, but you probably own different classes of assets unless you own only one stock, or one class of stock (large cap, small cap, value, etc.). Exclusive of bonds, the Callan Periodic Table of Investment Returns (link below) lists Large Cap Equity, Developed Ex-US Equity, Small Cap Equity, Emerging Market Equity, Real Estate, and Cash Equivalent. The table clearly shows the importance of owning different asset classes, as none perform at the top of the table year after year.

https://www.callan.com/research/2023...eriodic-table/
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Old 04-02-2024, 07:51 PM   #31
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I do scrape gains from some funds during the year that have shot up surprisingly, rather than selling funds that are lagging; those I will have to add to unless they catch up.
One of my core funds, Fidelity Contra is up 45% year over year (a surprising overperformance over the S&P), and I have scraped money from it to fund both withdrawals and bonds (and a bit in mid cap), to rebalance. I've taken a bit of gains (about 20% of gains each time) 3 times over the last year.
I guess if you don't rebalance at the same date every year, that could be considered the dreaded "market timing" but it doesn't really seem that way. Selling Contra and some from the S&P index reduced my stock allocation from 68% to 65% (allocation should be 63-65%); probably I would have had to sell at bit more if I hadn't done it earlier--however I sold a bit last week and it is down 5% this week, so I throw up my hands to the anecdote.

I don't think there is an ideal way to rebalance/sell for withdrawals. Doing it at the same date every year has the advantage of simplifying things, however. You still have to decide what to sell, however.
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Old 04-02-2024, 08:02 PM   #32
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You may not have a traditional Stock/Bond AA, but you probably own different classes of assets unless you own only one stock, or one class of stock (large cap, small cap, value, etc.). Exclusive of bonds, the Callan Periodic Table of Investment Returns (link below) lists Large Cap Equity, Developed Ex-US Equity, Small Cap Equity, Emerging Market Equity, Real Estate, and Cash Equivalent. The table clearly shows the importance of owning different asset classes, as none perform at the top of the table year after year.

https://www.callan.com/research/2023...eriodic-table/
We have about 20 to 30 different ETFs in each account. They are fairly balanced in the sense of they cover total market, foreign, emerging market, different sectors, tech, value etfs etc.
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Old 04-02-2024, 08:29 PM   #33
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We have about 20 to 30 different ETFs in each account. They are fairly balanced in the sense of they cover total market, foreign, emerging market, different sectors, tech, value etfs etc.
Why work so hard? VT/VTWAX does it all.
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Old 04-02-2024, 08:34 PM   #34
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Why work so hard? VT/VTWAX does it all.
Legacy from when ML was managing our portfolio. We got rid of bond etfs but kept the others. We added a couple of our own.
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