Is there a "how to" on rebalancing?
I'm realizing my asset allocation is out of whack, and I'm wanting to rebalance.
But really, I think it makes more sense in my situation to just start buying more of the thing I need (bonds, and potentially alternatives and potentially more international exposure), as opposed to instantly selling stuff I don't need (US Stocks). I'd like to be at 80/20 I guess (not sure I've really nailed that down yet).
First, can anyone advise on why it would make sense to do it one way or the other?
Method 1:Sell overweighted asset and buy underweighted asset vs.
Method 2: Buy Underweighted asset (and maybe 'turn off' automatic investments into Overweighted asset), until things straighten out.
Method 2 seems simpler to me, if you have patience I guess? Simplicity is KEY to me going forward.
Does anyone have a spreadsheet they use to go about figuring this out?
Overview:
$98,500 Portfolio
80% US Stocks
10.5% Intl Stocks
2% US Bonds
4% Cash
3.4% Alternatives
1% Intl Stocks
Traditional 401k (2 of them, haven't rolled over prior employer one yet): $51,250 total
$29k of which is in Vanguard Target Retirement 2055
$22k of which is in an SP500 fund
Allocation:
72% in US Stocks
20% in Intl Stocks
3.6% in US Bonds
1.9% in Intl Bonds
2% in "Alternatives"
Roth IRA: $21,730 total, VTSAX
94% US Stocks
.8% Intl Stocks
5.4% "Alternatives"
Taxable Brokerage account: $21,625 total, VTSAX
90% US Stocks
.8% Intl Stocks
5.2% Alternatives
4% cash
(not sure why these percentages are not the same as the VTSAX I own in my Roth IRA...all numbers from PersonalCapital)
Traditional IRA: $2,500 total. Just getting this started this year when I bailed on the idea of a Roth IRA...I think traditional makes more sense for me. All cash, thinking of using this to buy some bonds. That would make sense right, since I wouldn't be taxed on the income from the bonds now right?
Payflex HSA: $1,500. Sitting on this in cash, as I'm not sure how my asset allocation in my HSA should play into my overrall Asset Allocation. I have access to a Vanguard 500 Index Fund Admiral. I guess I could use this to buy some bonds too.
Employee Stock Purchase Plan: Currently sending $250 a month to this for a max of $6k by mid next year. At which point we will get to buy our company's stock at 15% discount. Our stock is largely correlated to the performance of the overall market I would think, as it's a mid-size asset management company. So I consider this S&P500-ish, but really it would be a single-stock. I don't own any single stocks (until this happens next year).