Rebalancing 2018

[Dawg52]

Me too.

At some point I will go to a single fund and avoid the re-balancing task. The unfortunate part of a single fund is that withdrawals then come from both stocks and bonds instead of just the better performing fund, but the simplicity will outweigh the advantage at some point/age. Also, you lack more granular control over the equity/income split in a single fund, but I expect that's also OK at some point/age.

I purchased my first balanced fund ever the other day. I won't ever get to just one fund as I like having a good chunk of cd's and a couple of index specific funds, but I do plan to consolidate quite a bit to the balanced fund over time. Going for more simplicity as I age.

 

[Lsbcal]

Yeah - I’d rather use multiple funds. What I suspect will happen when I don’t want to deal with rebalancing anymore is I’ll just stop rebalancing and let the funds run on their own. Taking distributions in cash. Should be good enough.

When do you suppose this decrease in abilities will occur? Having trouble imagining it for myself.

But every time I look at my spreadsheets I do worry just a bit.

 

[audreyh1]

When do you suppose this decrease in abilities will occur? Having trouble imagining it for myself.

But every time I look at my spreadsheets I do worry just a bit.

I really don't know. Maybe late 70s? Certainly by then I hope to have several things figured out for aging - like where I'm going to live, as well as how investments are going to be handled. DH is 4.5 years older, so we'll have to figure out the where to age thing by his late 70s I think, so a bit earlier.

I have thought a lot about what I will do when I want to leave things alone, as I have to take steps now to move in that direction over decades in order to minimize tax consequences. But I can only guess as to when that will actually happen. I just want to have it set up so that at any point I can just leave things alone.

I think I didn't want to just put things in a balanced or target fund as those are not that tax efficient, and it would mean realizing a lot of gains to transfer everything in short time frame.

Instead I am gradually drifting over to a five index fund setup that I will rebalance as long as I can. And then leave well enough alone.

I'm hoping between distributions in cash from the mutual funds and an automatic set up of RMDs, I can have bank accounts funded and not have to worry about details.

 

[Ronstar]

In my old 401k days, I rebalanced by entering the AA pct's for each fund and the website rebalanced to the specified pct's for me. I haven't found this available on the Vanguard site. When Vanguard customers rebalance, do they have to calculate how much $ to move and then do a buy/sell of that $ between funds? Or does Vanguard have a system where you enter your targeted fund pct and it takes care of everything? Or do you have a Vanguard rep do it for you?

 

[audreyh1]

Fidelity does not have this capability in general. The only places I've seen it are my HSA account (maybe in the past?) and our Fidelity Charitable Fund.

When I am old enough I don't think I'll even want to deal with that step - entering percentages.

 

[Ronstar]

...When I am old enough I don't think I'll even want to deal with that step - entering percentages.

Me either. At that point, I'll just get a target retirement fund. I believe they rebalance on their own.

 

[NW-Bound]

I meant the kind of rebalancing where people sometimes claim that "the market rebalanced for me" meaning that equities dropped and got them back to their target allocation. Which is not rebalancing of course. They didn't rebalance when their equities or whatever were high, so they lost the opportunity.

I thought you were making a similar remark.

Yes, it is similar except that I get a bit of cash from the option premium as compensation.

It is a compromise as I like my stocks too much to sell them outright.

Buying low is not a problem I have, but selling high is mightily tough.

 

[audreyh1]

Me either. At that point, I'll just get a target retirement fund. I believe they rebalance on their own.

That’s a good choice for an IRA. Although at that age it will have probably gone well past any targets.

In my taxable accounts I can’t easily move money between funds. Doing so will realize sizable gains.

 

[audreyh1]

Yes, it is similar except that I get a bit of cash from the option premium as compensation.

It is a compromise as I like my stocks too much to sell them outright.

Buying low is not a problem I have, but selling high is mightily tough.

Rebalancing enforces that discipline. In selling high you are just making a usually small trim. The remainder of the position is there to keep running higher if that happens.

 

[Spanky]

I really don't know. Maybe late 70s? Certainly by then I hope to have several things figured out for aging - like where I'm going to live, as well as how investments are going to be handled.

I am struggling with similar things, e.g., where to live and financial management, etc. Eventually, it will work out regardless.

 

[audreyh1]

I am struggling with similar things, e.g., where to live and financial management, etc. Eventually, it will work out regardless.

I'm 58. DH 62. I'm thinking about it, but location planning will begin in earnest once I reach 70, so it's still a ways off. Depending on our health, I wouldn't expect us to move into a facility until we are both in our 80s - DH will be closer to 85. If there are health problems it could occur sooner, so it's good have some preparation earlier. And you have to get on waiting lists, etc., so I feel like we have to have a place picked out by the time DH is 80.

 

[NW-Bound]

Rebalancing enforces that discipline. In selling high you are just making a usually small trim. The remainder of the position is there to keep running higher if that happens.

Instead of selling out right now for $100, I promise to sell for $102 in a month, and the option buyer has to give me $2 now. So, in effect he will be buying at $104.

Yes, I do sell, but I want a higher price than the current price. I am greedy, but not as greedy as the option buyer who thinks the stock will go to more than $104.

 

[Spanky]

I'm 58. DH 62. I'm thinking about it, but location planning will begin in earnest once I reach 70, so it's still a ways off. Depending on our health, I wouldn't expect us to move into a facility until we are both in our 80s - DH will be closer to 85. If there are health problems it could occur sooner, so it's good have some preparation earlier. And you have to get on waiting lists, etc., so I feel like we have to have a place picked out by the time DH is 80.

Thanks for sharing your thought on selecting a place to live or the inevitable facility. We are slightly older but still believe that we are active and healthy. Thus, we are not thinking the 'facility' yet, but should be thinking or preparing about it as times go by. Cheers!