A question about rebalancing

Question:

If the asset allocation is 50:50 and there is a 10% correction, then the allocation would become 45:55… so then, I would re-balance to 50:50 by purchasing the US broad market ETF. Is that correct?

Monday Morning Millionaire Program Answer:

Exactly. And going in the opposite direction, if the US broad market ETF rises 10%, then the allocation would become 55:45. When that happens, you should re-balance by selling enough of your ETF to bring the asset allocation back to 50:50.

 

Dr. Milan Somborac

The Monday Morning Millionaire Program supports do-it-yourself (DIY) investors which I have been for over 50 years. About my team and me