Page 1 of 2

Yearly balancing or 15/35?

Posted: Fri Jun 07, 2019 1:48 am
by D.J.
I'm coming around a year with my PP. Should I rebalance once a year or only when one asset hits 15/35?

Thanks 8)

Re: Yearly balancing or 15/35?

Posted: Fri Jun 07, 2019 3:16 am
by europeanwizard
You check once a year. And only rebalance when the boundaries were hit.

Re: Yearly balancing or 15/35?

Posted: Fri Jun 07, 2019 5:24 am
by D.J.
Got it, thanks. What about when investing more? Rebalance? Or add invested amount in 25%x4?

Re: Yearly balancing or 15/35?

Posted: Fri Jun 07, 2019 8:22 am
by Cortopassi
When I hit my cash band because of 401k/IRA contributions, I rebalance all back to their percentages, which means the money isn't spread equally necessarily.

Re: Yearly balancing or 15/35?

Posted: Fri Jun 07, 2019 8:43 am
by Ugly_Bird
D.J. wrote:
Fri Jun 07, 2019 5:24 am
Got it, thanks. What about when investing more? Rebalance? Or add invested amount in 25%x4?
According to the book, it should be added to the Cash part. Rebalance when the part hits 35%

Re: Yearly balancing or 15/35?

Posted: Fri Jun 07, 2019 9:33 am
by Xan
There are any number of schemes. We've discussed this in some depth in the past. Basically, any of them will work, and keep you in the PP, as long as you stay within the bounds. The contribution strategy should be whatever's easy and helps you sleep at night.

Personally, I favor buying the lagging asset. Other options include buying each of the 4 assets equally, or buying each in proportion to their current percentage of the portfolio (this is the method that means that contributions will not affect your rebalancing at all). There are probably others.

Re: Yearly balancing or 15/35?

Posted: Fri Jun 07, 2019 4:45 pm
by Kbg
Using PortViz - 1978 to last month.

15/35 - 8.89% CAGR/13.2 MDD/.60 Sharpe/13 trades
Annually - 8.48/13.36/.55/40 trades

Check last day of the month and rebalance if necessary...

I think we have a clear numerical winner (Can't do check once a year and if it hit the band then rebalance)

Re: Yearly balancing or 15/35?

Posted: Fri Jun 07, 2019 8:41 pm
by Ugly_Bird
Kbg wrote:
Fri Jun 07, 2019 4:45 pm
Using PortViz - 1978 to last month.

15/35 - 8.89% CAGR/13.2 MDD/.60 Sharpe/13 trades
Annually - 8.48/13.36/.55/40 trades

Check last day of the month and rebalance if necessary...

I think we have a clear numerical winner (Can't do check once a year and if it hit the band then rebalance)
Those are pure examples. They do not account for new money, right? And as it was noted already those can be added in different ways, e.g. to cash portion, or to lagging portion, or evenly to keep the current ratio.
All in all it should be close to the numbers above, which are not too much different.
Personally, I started 4x25 HBPP in 2013 and did not rebalance yet. Had some assets at around 22 and the others at 28-ish % . Adding new money to cash, still didn't hit the 15/35 bands. This is what I really like, the less touching it, the better.

Re: Yearly balancing or 15/35?

Posted: Fri Jun 07, 2019 10:51 pm
by Kbg
Correct...to me it seems self evident that during the accumulation phase, you add to the the assets underweight.

Re: Yearly balancing or 15/35?

Posted: Fri Jun 14, 2019 10:02 am
by ochotona
Why not check frequently... every month? Three of the assets are quite volatile; you won't see the volatility if your sampling interval is long.

Re: Yearly balancing or 15/35?

Posted: Sat Jun 15, 2019 8:28 am
by sophie
I've been checking monthly only because I got into the habit of tracking expenses and finances on a monthly basis. It's fun for tracking purposes, but checking asset proportions that often is like watching paint dry. Rebalance events happen every 2-3 years, more or less depending on how you're handling contributions. Checking once a quarter is easily enough. I do like to log into each account at least that often, and that's a good way to remind myself to do it.

Re: Yearly balancing or 15/35?

Posted: Sat Jun 15, 2019 11:21 am
by frugal
sophie wrote:
Sat Jun 15, 2019 8:28 am
I've been checking monthly only because I got into the habit of tracking expenses and finances on a monthly basis. It's fun for tracking purposes, but checking asset proportions that often is like watching paint dry. Rebalance events happen every 2-3 years, more or less depending on how you're handling contributions. Checking once a quarter is easily enough. I do like to log into each account at least that often, and that's a good way to remind myself to do it.
Hi Sophie!!!

What do you think of having a EU-PP with 3 assets except CASH, having other resources outside of PP for that.

Please comment.

:-*