Yearly balancing or 15/35?

[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

[europeanwizard]

You check once a year. And only rebalance when the boundaries were hit.

[D.J.]

Got it, thanks. What about when investing more? Rebalance? Or add invested amount in 25%x4?

[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.

[Ugly_Bird]

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%

[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.

[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)

[Ugly_Bird]

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.

[Kbg]

Correct...to me it seems self evident that during the accumulation phase, you add to the the assets underweight.

[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.

[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.

[frugal]

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.

[sophie]

Good to hear from you frugal!!! Have you been lurking all this time?

I think there are others who can answer your question far better than I.

If your question translates as "can I get better returns by eliminating the cash component" then the answer is "yes, probably but not enough to really make a difference."

If you go to this handy website you can play around with numbers yourself:

https://portfoliocharts.com/portfolio/my-portfolio/

Comparing a 25x4 US PP to 33x3 US PP without cash, the elimination of cash juices the annual real returns from 4.5% to 5.6%. However, if you don't have cash in your portfolio that means you are holding it on the side and not counting it in your returns calculations. So do you want a smaller piece of a bigger pie, or a bigger piece of a smaller pie?

[frugal]

Good to hear from you frugal!!! Have you been lurking all this time?

I think there are others who can answer your question far better than I.

If your question translates as "can I get better returns by eliminating the cash component" then the answer is "yes, probably but not enough to really make a difference."

If you go to this handy website you can play around with numbers yourself:

https://portfoliocharts.com/portfolio/my-portfolio/

Comparing a 25x4 US PP to 33x3 US PP without cash, the elimination of cash juices the annual real returns from 4.5% to 5.6%. However, if you don't have cash in your portfolio that means you are holding it on the side and not counting it in your returns calculations. So do you want a smaller piece of a bigger pie, or a bigger piece of a smaller pie?

Hello,

my understanding about PP is higher and I don't feel the need to read all about market or PP. But I visit the forum once a week.

Let's say that the PP is a lower value than other "assets" I have, as cash and others in different forms.

When have you made PP? Which year?

How do you keep learning about markets?

Regards and have a nice weekend!