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Adding new money to PP versus rebalancing?

Posted: Thu Jan 26, 2012 8:54 pm
by ozzy
Instead of rebalancing, what if I just contribute new money to the underperforming assets to maintain balance?  Thus I would never sell an asset (until retirement), just accumulate more.

Is there any drawback to never selling an asset?

Thanks.

Re: Adding new money to PP versus rebalancing?

Posted: Thu Jan 26, 2012 9:24 pm
by MediumTex
ozzy wrote: Instead of rebalancing, what if I just contribute new money to the underperforming assets to maintain balance?  Thus I would never sell an asset (until retirement), just accumulate more.

Is there any drawback to never selling an asset?

Thanks.
Over time, your new contributions will make up a smaller and smaller perentage of the whole PP value, and thus you will probably eventually encounter rebalancing events no matter what asset you are buying into with new money.

I don't think it matters that much whether you put new money into cash or the lagging asset.  Do whatever feels most comfortable to you.

Re: Adding new money to PP versus rebalancing?

Posted: Fri Jan 27, 2012 6:18 am
by steve
There may be times when you can sell for tax loss or tax gain harvesting.