In today’s podcast, we are going to explore Rebalancing. We will look at investment portfolio construction, how rebalancing is implemented and when you should consider doing the rebalancing. When you are getting ready to retire you will begin to think more about how your investments can generate the cash flow and you will likely feel the need to reduce volatility when you begin taking portfolio withdrawals. Rebalancing serves primarily as a risk mitigation tool rather than a means of maximizing returns. According to a paper by Vanguard, “rebalancing tends to increase a portfolio’s Sharpe ratio, improving risk-adjusted returns”.
Jason’s new book is now available exclusively on Amazon.Retirement Calculator – How Much Money Do I need To Retire?
Articles, Links & Resources:
Vanguard: Getting Back On Track – A guide to smart rebalancing
Morningstar: 5 Ways Rebalancing Can Benefit Your Retirement Plan
Retirement Researcher: How Often Should I Rebalance My Portfolio
Michael Kitces: Finding The Optimal Rebalancing Frequency. Time Horizons Vs. Tolerance Bands