A Different Take on Rebalancing

Money Guy Show

Brian Preston, CPA, CFP®, PFS and Bo Hanson, CFA, CFP® | Fee-Only Fiduciary Advisors

Education, Retirement, Moneyadvice, Investing, Savingmoney, Personalfinance, Business

4.6 • 2.8K Ratings

🗓️ 12 October 2018

⏱️ 45 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

So much is made about this tool of asset management, but how much does the average investor actually know?

As a brief overview, rebalancing is getting your investment allocation to the appropriate target. For example, if your portfolio is comprised of 60% in risk assets (i.e. stocks) and 40% in conservative assets (i.e. bonds) and one piece of that moves differently and throws the balance off, rebalancing helps to get you back to your original allocation.

In the simplest form, rebalancing buys the assets that have gone below the allocation threshold you would like to be at and sells the assets that have gone over. And you rebalance so that you can maintain the appropriate level of risk in your portfolio and to help stay on track to reach long-term financial goals.

But what does the research say about rebalancing? And what is the common sense approach when it comes to this tool? Tune in to this week’s episode to hear us dive into the nuts and bolts of rebalancing and how you can use it in your financial life.

For more details, please visit the show notes on our website: https://www.moneyguy.com/2018/10/a-different-take-on-rebalancing/

Transcript

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0:00.0	Today, we're going to cover a different take on rebalancing your portfolio.
0:05.6	It's Brian Preston, the money guy, restoring order to your financial chaos, retirement,
0:12.8	investing, taxes.
0:14.5	You've got financial questions, he's got financial answers.
0:18.1	It's Brian Preston, the money guy.
0:21.1	Oh, this is one of those things where I got to tell you about the financial planning
0:24.8	industry or investment industry.
0:27.3	Is it people try to figure out how they can differentiate themselves from everybody
0:31.9	else?
0:32.9	Sometimes, a lot of it is fancy talk that doesn't really do anything.
0:40.0	You can really nerd out on this stuff.
0:42.0	Then there's other people that are trying to sell things off a supposedly their system.
0:47.7	We want to talk about that because you do have the robot advisors that are out there.
0:52.2	Some of them are saying, I think I've even heard people talking about it.
0:55.1	The minimum people are talking about their rebalance once a month.
0:58.8	It's quarterly, annually.
1:00.6	Does that add any benefit?
1:02.3	I've actually even heard more often.
1:04.1	That's what daily rebalance is.
1:06.4	Is that better?
1:08.2	If rebalancing is definitely something that's needed in the portfolio, is daily better than
1:12.6	never rebalancing?
	...

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