The real cost of a rebalancing strategy


How much does a rebalancing strategy take away from the APR (annual percentage return) from just keeping money in the S&P500 using a market index exchange-traded fund (ETF) such as SPY, VOO or IVV?

Monday Morning Millionaire Program Answer:

Rebalancing is a risk management technique and not a method of maximizing returns. Just keeping money in the S&P500 using a market index ETF will give investors the highest return but the cost is greatest portfolio value fluctuation. For an evidence-supported answer, it is useful to review the habits of highly effective investors.

  1. Having an early, disciplined savings program
  2. Self-directed (do-it-yourself) investing
  3. Buying the entire US market
  4. Buying and holding
  5. Buying low, selling high
  6. Avoiding complexity

Let us now look at a detailed answer.

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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

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