if you have an AA of 65/35 and it's not 65/35 and you can add money and that new money will get the AA back to 65/35 (or closer, more on that in a moment) then that's what you should do. If you keep putting in money 65/35 and you're already not 65/35 and the 65 portion does better than the 35 it will make your balance even more off kilter. So just throw new money at the allocation that's underweighted to where you want it to be. This may or may not be sufficient depending on how off kilter they are from one another.
Also, you should have some idea of when it's needed to actually rebalance (moving money from one side to the other, not throwing new money at the underweighted thing). You should read up on the 5%+/- rebalancing band article : https://thefinancebuff.com/5-percent-re ... -band.html
in other words, it doesn't have to be 65/35 all the time. You'd have to be rebalancing possibly everyday if that were the case. If it moves by a few percentage points, it's fine. But more than that, and you might want to rebalance to maintain the desired risk.
Also, you should have some idea of when it's needed to actually rebalance (moving money from one side to the other, not throwing new money at the underweighted thing). You should read up on the 5%+/- rebalancing band article : https://thefinancebuff.com/5-percent-re ... -band.html
in other words, it doesn't have to be 65/35 all the time. You'd have to be rebalancing possibly everyday if that were the case. If it moves by a few percentage points, it's fine. But more than that, and you might want to rebalance to maintain the desired risk.
Statistics: Posted by arcticpineapplecorp. — Sat Feb 24, 2024 4:02 pm — Replies 1 — Views 51
