Rebalance and dividend/coupons

[rnmike10]

Hi All,

New PP'er. Getting early pension payout from old employer rolling into IRA @ Vanguard.  Started research and came upon the PP option.

Plans:

IAU, VTI, LT bonds and T-bills on secondary market.

Perhaps a little EDV.

Question and/or clarification:

1. rebalance yearly OR when bands reach 35/15.

2. dividends and coupons go to cash account and use to rebalance.

Am i correct?

[Pointedstick]

hi rnmike! Welcome to the forum.

1. rebalance yearly OR when bands reach 35/15.

It's best to only rebalance only when you hit the 15/35 bands to avoid rebalancing too frequently, which will cost you money in commissions and dampen the returns.

2. dividends and coupons go to cash account and use to rebalance.

Whichever makes you sleep better. Personally, I reinvest dividends, although with actual bonds that's obviously not an option. That basically leaves VTI for you to decide what you want to to with its quarterly distributions.