walkinwood
Thinks s/he gets paid by the post
I have been kicking myself for not having rebalanced all the way back to my target AA (60/40) when my 5% rebalance band was reached. ie. my portfolio hit 55/45.
I created a simple spreadsheet using only VG's intermediate treasury fund (VFITX) and VG's total market (VTSAX) from 1/1/2020 to 8/2/2020 and the following :
- Portfolio was at 60/40 on 1/1/2020
- Dividends stayed in cash until it was time to rebalance. ie. dividends were not reinvested. This mirrors my personal choice since I'm ER'd and need the cash.
- When the 5% band was breached, the portfolio was rebalanced to 60/40
- No taxes.
The data came from Yahoo finance which made it easy to download the historical prices and dividend information.
I found very little difference in the end value of the portfolio (to 8/2). A 7.18% increase in the no-rebalance portfolio v/ a 7.9% increase in the rebalanced one. On a $1MM portfolio, that translated into an extra $7134.
Nothing to sneeze at, but nothing to beat myself about either. Also, these small differences can add up to a substantial difference over many rebalance events.
I don't intend to share my spreadsheet & I could have made an error in it.
Has anyone else done a calculation like this? I'd like to see if you're reaching the same conclusion.
I created a simple spreadsheet using only VG's intermediate treasury fund (VFITX) and VG's total market (VTSAX) from 1/1/2020 to 8/2/2020 and the following :
- Portfolio was at 60/40 on 1/1/2020
- Dividends stayed in cash until it was time to rebalance. ie. dividends were not reinvested. This mirrors my personal choice since I'm ER'd and need the cash.
- When the 5% band was breached, the portfolio was rebalanced to 60/40
- No taxes.
The data came from Yahoo finance which made it easy to download the historical prices and dividend information.
I found very little difference in the end value of the portfolio (to 8/2). A 7.18% increase in the no-rebalance portfolio v/ a 7.9% increase in the rebalanced one. On a $1MM portfolio, that translated into an extra $7134.
Nothing to sneeze at, but nothing to beat myself about either. Also, these small differences can add up to a substantial difference over many rebalance events.
I don't intend to share my spreadsheet & I could have made an error in it.
Has anyone else done a calculation like this? I'd like to see if you're reaching the same conclusion.