Author Topic: Need help with bonds rebalancing strategy  (Read 766 times)

max9505672

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Need help with bonds rebalancing strategy
« on: December 26, 2018, 02:45:28 PM »
Hello,

Quick introduction, I am 28 y.o. in accumulation phase (and will be for a long time) that began investing about 2 years ago with a AA% of 90% equity and 10% bonds. Shortly after that, I decided to go 100% and because the market was good, I decided not to sell the bonds and only to dilute them by buying stocks only for the next year and a half.

With the current market, I am currently looking at a logical way to rebalance my AA% to 100% equity and get rid of my bonds. I know this sounds like market timing, but I still have around 6.5% of bonds that I would consider selling to buy more equity and I think it's better to do it while the market is going down than while it's going up. Obviously, no one knows if it will go much lower or not, so that's the reason I'd need input on how to do this.

Would it be better to sell everything at once or gradually sell some of them over a pre-determined period of time?

Thanks,
Max

Reynolds531

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Re: Need help with bonds rebalancing strategy
« Reply #1 on: December 27, 2018, 06:14:33 PM »
You made a plan. Unless something radical changed about you then stick to the plan.

Anything else is market timing. And will very likely go badly.

MustacheAndaHalf

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Re: Need help with bonds rebalancing strategy
« Reply #2 on: December 28, 2018, 09:02:28 AM »
The market isn't "going down", it is down.  You can describe the market, but you can't accurately predict what it does next.

In my view, the main benefit of a small bond allocation is getting into the habit of rebalancing.  A few years before retirement, sticking with 100% equities can mean a downturn delays your retirement date.  If you won't rebalance to bonds now, what will change when you're close to retirement?

max9505672

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Re: Need help with bonds rebalancing strategy
« Reply #3 on: January 03, 2019, 12:50:01 PM »
If you won't rebalance to bonds now, what will change when you're close to retirement?
Maybe I am not well understanding your question, but what will change is the risk tolerance. Being in an accumulation phase now and for a long time, I can deal with 100% equities and the risks/volatility that comes with it. When I'll be approaching retirement and will actually need this money on a day to day basis, I will rebalance with more bonds and less equities.

HeadedWest2029

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Re: Need help with bonds rebalancing strategy
« Reply #4 on: January 03, 2019, 01:11:44 PM »
at 6.5% we're not talking about a lot of money, no?
Make the switch if that's the AA you want and will stick with through thick and thin for the foreseeable future. Unless this is in a regular brokerage, in which case you might hold out for capital gains / capital losses if close to a 1 year holding period.  If already a long-term holding, which it sounds like it might be, make the switch

max9505672

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Re: Need help with bonds rebalancing strategy
« Reply #5 on: January 04, 2019, 11:27:59 AM »
at 6.5% we're not talking about a lot of money, no?
Make the switch if that's the AA you want and will stick with through thick and thin for the foreseeable future. Unless this is in a regular brokerage, in which case you might hold out for capital gains / capital losses if close to a 1 year holding period.  If already a long-term holding, which it sounds like it might be, make the switch
Not a lot of money, no (less than 10K$). It was a long-term holding on non-taxable account, so I made the switch. Thanks for the advice