To rebalance or not to rebalance, Bogle's take and a good refresher.

frayne

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Jack Bogle, the founder of Vanguard and a pioneer of index investing, generally believed that rebalancing a portfolio should be done with simplicity and discipline in mind. While he acknowledged the importance of rebalancing to maintain an appropriate risk level, he also advised against overcomplicating the process or doing it too frequently. Here are a few key points about his perspective:

  1. Rebalance to Manage Risk, Not to Maximize Returns
    Bogle emphasized that the purpose of rebalancing is to control risk and maintain the asset allocation that aligns with an investor's goals, not to chase higher returns.
  2. Stick to a Plan
    He advocated for a disciplined approach to rebalancing. This could mean rebalancing on a set schedule (e.g., annually) or when the portfolio's asset allocation drifts significantly (e.g., beyond a 5% threshold from the target allocation).
  3. Avoid Overtrading
    Bogle warned against frequent rebalancing, as it can lead to unnecessary transaction costs and tax consequences. He believed that simplicity and a long-term perspective were essential.
  4. Consider Doing Nothing
    Bogle often pointed out that, in many cases, a portfolio left alone would naturally self-correct over time, especially for long-term investors with diversified holdings.
  5. Moderation is Key
    He suggested a pragmatic approach: rebalancing less frequently and tolerating modest deviations from the target allocation to avoid excessive costs or complexity.
Bogle's advice aligns with his broader philosophy of keeping investing simple, minimizing costs, and maintaining a long-term focus.
 
Through the years here much discussion on this topic and a lot of different views and reasons why.
I for one is a #4 lazy well diversified and a buy and hold do nothing investor.
Over the 40 plus years of this method I'm right back in the percentage of ~80% equity where I started out with.
Good or bad but everything always seems to come back in where I would like it.
 
I agree with the points. Especially the last one, Moderation. Don't overreact to market fluctuations.
 
During accumulation, I rebalanced diligently. As I retiree, I no longer find it necessary. First my bonds are now all TIPS so I'm not going to rebalance out of those as the purpose of them is to provide a steady income, in real terms. In my case, stocks can do whatever they do and it'll all be fine. If sometime in the future stocks end up growing more than I expect them do, despite withdrawing from them, then I'll consider beefing up TIPS. Not urgent and not likely, but will always keep it in mind.

Cheers.
 
If needed, I rebalance once a year. Simple enough for me :).
 
This past year, I rebalanced whenever my equity holdings exceeded the 5% threshold of my 60/40 asset allocation, which occurred three or four times. I’m half-tempted to make one final rebalance in 2024 and then leave everything untouched in 2025. That said, 2025 was one of the best years in recent memory for the S&P 500, which makes up the majority of my 60% equity allocation.

This year, I also allocated approximately 5% of my T-IRA to speculate on a FIDO Bitcoin ETF and 1,000 shares of Palantir. That decision has effectively doubled my initial 5%, so I may use that gain as a starting point for my next rebalance reset.
 
During Accumulation - rebalanced with new contributions.

When Retired - watch stuff go up and down.

Stay flexible by watching the Asset Allocation percentage and bands. Bogle and Bernstein foundations are good ideas. I have a frameworthat largely adheres to their basic principles.
 
I have been corrected before but not doing any adjusting and letting the AA do its thing. I'm still guilty of rebalancing even though I haven't done the rebalance myself.
 
I helped get one of my sister's set up with her investments... and this was prior to her DH passing...

Sooo, it has been at least 20 years since we have done anything to rebalance except where we take out the RMDs...

I am kinda the same... except for buying a lot of preferred shares and some bonds with the cash I got from moving my 401(k) to IRA... decided to change my allocation ratio so not really rebalancing...
 
I was very disciplined to rebalance while w*rking. I am currently stock heavy. Maybe I'm being greedy or maybe lazy or both. I will need to withdraw from my taxable account next year. I can use that to rebalance.

I agree with everything listed in the OP about rebalancing.
 
I’m a tad out of balance with the way stocks have risen in recent years. But the only stocks I have to sell will generate capital gains and I don’t want that due to my ACA subsidy planning. So I’m letting things roll for now.
 
I rebalanced a bit back in the 5-10 years before retirement in 2013. It helped control risk, as they say.

Nowadays, I eat risk for breakfast. I'm going for the gold with stock index funds as I invest excess retirement income to achieve >95% equity AA.
Happy New Year to all...
 
I pretty much do my rebalancing when I take my RMDs and "spending money" from the 401(k).
 
Because I know I should heed the advice "Don't just do something, sit there!", I made rebalancing the thing to both "do something" and (kind of) "sit there".

I've got every position defined to one or more of 8 investment categories and have a script that pulls all the positions into a spreadsheet. When any category is 10% off from it's target, I certainly rebalance. So if the target was 10%, I'd rebalance at <9% or >11%.

But usually, once per year, I'll be taking some action for taxes or to fund spending and I'll rebalance my way to getting that done, so it doesn't get to the rebalancing trigger points.

The main thing, I think, is to be steady with your targets for a very long time. It matters less what your targets are, and more about not chasing high-fliers. Stability means always having something to complain about :)
 
"Lethargy bordering on sloth." If it's good enough for Warren Buffet, it's good enough for me.
 
Actually I thought Jack Bogle didn’t believe in rebalancing. Maybe he changed his tune. Or maybe he just didn’t believe in rebalancing during accumulation as he strongly touted buy and hold.
 
During accumulation you rebalance by shifting where new contribs go...
For us, I would restate that slightly. Our taxable account has always been 100% stock and our IRAs & 401Ks have always been stocks + bonds. Because we made the decision not to hold anything but stocks in our taxable account, it was almost never possible to get to our overall AA merely by directing where contributions in our 401Ks went without also occasionally making a sale/purchase to rebalance.

Cheers.
 
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