rebalancing PP since 1972

[Alanw]

krigare, the portfolio started at $400,000 on 1/1/76 and ended at $3,742,581.  Past performance is no guarantee of future results.  Also, this was completely tax-free, because I couldn't possibly work out what taxes would have been on all the interest and dividends.  So the returns are seriously overstated.  I didn't think that would affect rebalance frequency very much, but it may have.

modeljc and Alanw, do you have dividends and interest reinvested into your stock fund and TLT?  Or does that get added to SHY/cash?  It seems like cash would get down to 15% pretty fast if all the withdrawals come from it, and generate much more frequent rebalances.  Are you doing that to be tax-efficient, or because cash has no yield right now, or some other reason?

Is there an HB-approved, official way of taking withdrawals in retirement? 

In my previous post, I meant to say that I am contemplating 35-15 rebalance bands rather than 30-20.  I have dividends and interest reinvested into stock and TLT accounts.  If you take a 4% withdrawal (I take 5%), it would still take 2-3 years to hit a 15% rebalance band for cash under normal circumstances.  If one of the other parts of the PP were to explode in value, it would be sooner.  I am just trying to keep my PP as simple as possible.

[stone]

Alanw, is it tax reasons that cause you to reinvest interest and dividends? Otherwise it sounds like an unfortunate way to inadvertently end up making purchases of leading assets when they are peaking. Having the dividends and interest go to cash is the standard set up isn't it?

[Alanw]

My LTT's are all in an IRA.  The stock portion is about 50-50 IRA and taxable.  It may be benefitial to have the stock dividends go to the cash account but I really hadn't given it much thought.  I'll check with my accountant this year to see if there is an advantage.  I don't know if it will make much difference when it comes to rebalancing.  Anyway, Stone, thanks for bringing it to my attention.

[escafandro]

Any suggestions on the best way to take withdrawals would be appreciated.

I subscribe to this query.
My fear is that if I'm withdrawing from cash only I'm going down artificially the asset and therefore changing the effect to buy low and sell high that gives me the 15/35 bands system.

[Alanw]

Any suggestions on the best way to take withdrawals would be appreciated.

I subscribe to this query.
My fear is that if I'm withdrawing from cash only I'm going down artificially the asset and therefore changing the effect to buy low and sell high that gives me the 15/35 bands system.

For me, the simple way is to withdraw from cash.  When you hit a 15% re-balance band with cash, you will automatically have to replenish cash with your highest returning asset to bring the portfolio back to 4X25%.