How often should I rebalance when adding money to PP?

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gospodin_i
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How often should I rebalance when adding money to PP?

Post by gospodin_i » Mon Jul 08, 2019 2:21 pm

This might have been discussed on the forum before...

I've been running a PP for about 18 months now, happy with the returns after an initial period of mixed (negative) results...

Last year, after I had my initial allocation in the portfolio, I made investments in some other assets, which I don't consider part of my PP (high-er risk ETFs, P2P lending, etc.)

However, this year, I decided to keep adding funds to my PP and work on building it up. So far, I've been doing it once every 6 months or so, but that's obviously not the best approach. I want to start making regular contributions, however, I'm wondering whether I should re-balance every time I add cash to my account (even a monthly installment would trigger the 15/35 at the moment) or wait a few months to avoid paying all those fees.
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Cortopassi
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Re: How often should I rebalance when adding money to PP?

Post by Cortopassi » Mon Jul 08, 2019 3:21 pm

No reason every 6 months isn't the best approach for now.

Or every year. If the amount is small enough that every time you put cash in triggers the cash band every month, I agree that would probably be too much spent on commissions.
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ochotona
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Re: How often should I rebalance when adding money to PP?

Post by ochotona » Mon Jul 08, 2019 4:10 pm

Wait... why are you paying fees when you make an investment?

Free at Fidelity: IVV, TLT, IAU

Free at Schwab: SCHX, TLT or SPTL, SGOL

Free at TD Ameritrade: SPLG, TLT, GLDM

**** Oh, are you in Europe? ****
gospodin_i
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Re: How often should I rebalance when adding money to PP?

Post by gospodin_i » Tue Jul 09, 2019 11:22 am

ochotona wrote:
Mon Jul 08, 2019 4:10 pm
**** Oh, are you in Europe? ****
I am. I'm using IB and (currently) running a US-focussed PP, which is another pain because of European regulation requiring ETFs to disclose key information in a specific way (I've covered that in another thread on the forums).

That means most of the ETFs I can buy are traded in Europe, where commissions are higher (e.g. €10 vs. $2 per trade).
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Re: How often should I rebalance when adding money to PP?

Post by Smith1776 » Wed Jul 10, 2019 12:19 pm

I generally think that rebalancing bands are the best way to go.

I remember Craig once writing that when you contribute to the PP, add to the cash portion first. Once it hits the 35% band, take some of that cash and buy into the lagging assets and bring the whole portfolio up to par. Of course, try to avoid selling as much as possible, unless you are tax loss harvesting.
I still find the James Rickards portfolio fascinating.
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ochotona
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Re: How often should I rebalance when adding money to PP?

Post by ochotona » Wed Jul 10, 2019 1:39 pm

gospodin_i wrote:
Tue Jul 09, 2019 11:22 am
ochotona wrote:
Mon Jul 08, 2019 4:10 pm
**** Oh, are you in Europe? ****
I am. I'm using IB and (currently) running a US-focussed PP, which is another pain because of European regulation requiring ETFs to disclose key information in a specific way (I've covered that in another thread on the forums).

That means most of the ETFs I can buy are traded in Europe, where commissions are higher (e.g. €10 vs. $2 per trade).
I'm so sorry! That's costly. Are no-fee index mutual funds available through IB to Europeans, or do you pay €10 for those also? Mutual funds are kind of like your Dad's old way to invest, but if you're not trading, then they're OK.
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Re: How often should I rebalance when adding money to PP?

Post by gospodin_i » Thu Jul 11, 2019 3:32 am

ochotona wrote:
Wed Jul 10, 2019 1:39 pm
I'm so sorry! That's costly. Are no-fee index mutual funds available through IB to Europeans, or do you pay €10 for those also? Mutual funds are kind of like your Dad's old way to invest, but if you're not trading, then they're OK.
I haven't really looked into mutual funds — there's a whole bunch of them, but tbh I prefer the PP method. I don't make too many trades, so the commissions are bearable at the moment.
Smith1776 wrote:
Wed Jul 10, 2019 12:19 pm
I generally think that rebalancing bands are the best way to go.

I remember Craig once writing that when you contribute to the PP, add to the cash portion first. Once it hits the 35% band, take some of that cash and buy into the lagging assets and bring the whole portfolio up to par. Of course, try to avoid selling as much as possible, unless you are tax loss harvesting.
It's what I've been doing — money saved that I want to invest get added to the cash allocation and then I rebalance. But at the moment, that would trigger re-balancing every month.

I think I'm gonna stick with my current approach for the time being, i.e. add money to my PP every 3-6 months and re-balance at that point.
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Re: How often should I rebalance when adding money to PP?

Post by sophie » Thu Jul 11, 2019 11:05 am

I do kind of a hybrid approach: fixed monthly investments in gold and stocks, and the remainder gets thrown into cash. I then rebalance when I hit a band, which is generally cash hitting the upper limit.

If I had to pay commissions on stock purchases though, I'd probably just throw the cash into the kitty every month and check the balance. I do pay commissions on gold, but I get a useful discount via the Perth Mint's online depository savings program.
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Re: How often should I rebalance when adding money to PP?

Post by gospodin_i » Wed Jul 17, 2019 2:39 am

Wanted to thank everyone for the advice — I always get very useful suggestions when I ask people on the forums here.
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