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A little portfolio rebalancing

August 23rd, 2020 at 04:58 pm

I realized a while back that our cash allocation had grown rather large - larger than I really want it to be.

I finally sat down and did something about it today. I had a bunch of cash in both my traditional IRA and my Roth, so two places with no tax implications to moving money around.

I put in a buy order for something in the traditional IRA. Then I put in an order to move money into the settlement account in my Roth. I know I could do the buy orders I want right away but I always get nervous by the "there are insufficient funds in your settlement account for this transaction" warning that pops up. So I'll wait a day or two until the money is actually there and then place the buy orders.

The end result will be our cash allocation dropping and our stock allocation rising by about 2.7% which will put us back right about where I want our asset allocation to be.

Posted in Personal Finance | 5 Comments »

5 Responses to “A little portfolio rebalancing”

  1. rob62521 Says:
    August 24th, 2020 at 07:36 pm 1598297803
    1598297803

    You are one smart cookie. Wish I understood finance as well as you do.

  2. LuckyRobin Says:
    August 26th, 2020 at 03:20 am 1598412036
    1598412036

    What is a settlement account? Does that have to do with being a doctor in case you get sued?

  3. terri77 Says:
    August 26th, 2020 at 02:20 pm 1598451652
    1598451652

    I also noticed my allocation was off balance, so I reallocated future contribution to get it back to my target goal.

  4. disneysteve Says:
    August 26th, 2020 at 02:33 pm 1598452428
    1598452428

    LuckyRobin, the settlement account is the cash account in your brokerage account. It's where un-invested funds are held. If I put in a buy order for a stock or fund but the settlement account doesn't have enough to cover it, I either need to send in more money (which I can't do for my Roth) or sell existing holdings to free up the cash. In this case, I sold $20,000 from the money market account and move it into the settlement account so that I could then use that money to make new purchases.

    terri77, that's a great way to do it but personally we are past the stage in our portfolio where we can rebalance by redirecting new contributions. That isn't enough to move the needle for us anymore.

  5. LuckyRobin Says:
    August 26th, 2020 at 08:44 pm 1598474656
    1598474656

    Oh, okay. I know very little about this stuff but am starting to learn.

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