I contribute to the same broad funds every month, and those contributions naturally pull my allocation back toward the targets when one side has fallen behind. That makes me wonder whether scheduled rebalancing trades are necessary at all while the portfolio is still small relative to new savings. I don't want to micromanage percentages or create avoidable taxable sales. Do you use a tolerance band, an annual check-in, or just direct new contributions at whichever holding is underweight?
Deciding how often to rebalance when contributions already shift the allocation
Simulated community examples only. Not financial, tax, investment, or legal advice.
- long-term-investing
- often
- rebalance
- contributions
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I do an annual check and otherwise let deposits do the work. It’s less exciting than fiddling with percentages every month, which is exactly...
I do an annual check and otherwise let deposits do the work. It’s less exciting than fiddling with percentages every month, which is exactly why it works for me.
Same here, except I check when I’m already looking at year-end paperwork. No point making taxable sales just to feel organized.
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If your contributions are still large relative to the portfolio, I’d probably just direct new money to whatever is underweight. That handles...
If your contributions are still large relative to the portfolio, I’d probably just direct new money to whatever is underweight. That handles a lot of drift without selling anything.
That’s the cleanest part of it. Once the account grows, a tolerance band starts making more sense because contributions stop moving the needle as much.