Comments on: Building, Balancing, and Rebalancing A Mutual Fund Portfolio

By: Josh

Josh — Fri, 01 Oct 2010 12:48:09 +0000

Trent, your set of 4 funds completely omits the Small Cap Value portion of the U.S. stock market. Just curious if there is a reason for this.

Historically, that quadrant has performed better over the long term than any of the other three quadrants of the U.S. stock market (i.e. Small Cap Growth, Large Cap Growth, and Large Cap Value), so if anything, I would want to overweight Small Cap Value, not leave it out of my portfolio!

By: JLP

JLP — Sat, 10 Nov 2007 03:56:26 +0000

Don’t wait to invest based on the $10 fee. If the market goes up 10% this year, and you don’t invest the $9,000, you could have made $900 in the market, then paid $10 in fees, for a net $890. If you put it in a 5% savings account, you’ll make $450 this year. You’ll lose $440 trying to save $10. You might pay a few dollars to Vanguard, but you and Vanguard will both make out better in the long run if you invest when you have the money.

By: dusty

dusty — Thu, 29 Mar 2007 21:45:31 +0000

Vanguard’s Target Retirement Funds will do the asset allocation and rebalancing for you. These Target Retirement Funds are funds of funds. Example the Target Retirement 2050 fund is made up of five Vanguard index funds:
72.2% Vanguard Total Stock Market Index Fund
10.2% Vanguard Total Bond Market Index Fund
10.2% Vanguard European Stock Index Fund
4.7% Vanguard Pacific Stock Index Fund
2.7% Vanguard Emerging Markets Stock Index Fund
The beauty is the minimum investment is only $3000., there is no quarterly fee and the expense ratio is only 0.21%.

By: James G.

James G. — Thu, 29 Mar 2007 21:15:11 +0000

Hey Trent, I like this post. I’d like to point out that there are some companies like T. Rowe Price who will let you buy into their funds with as little as $50 a month per fund (you can even do $50 per year if needed) with no fees for doing so. By using their Automatic Asset Builder program, investors can skip the high-yield savings account step and begin a regular investment program in high quality funds. The expense ratios for their funds aren’t bad either.

I originally wanted to go with Vanguard (still do), but couldn’t afford a lump sum of $3000, so I went this route and I think it could work for some of your readers if they’re in my situation. I was always told that investing as soon as possible is key.

By: J

Thu, 29 Mar 2007 21:07:25 +0000

I concur with the above comment. I believe it’s better to put more money into underrepresented positions rather than taking out of overrepresented positions and incurring the tax hit.

By: The Digerati Life

The Digerati Life — Thu, 29 Mar 2007 20:18:43 +0000

Here’s something I consider very carefully when I work on rebalancing my portfolio — I hardly ever sell due to tax considerations. So that I don’t incur a tax I stay put in my positions. Then I simply buy and add into underrepresented positions with new money/income (from job/business, etc) until the portfolio balances out. That’s been my strategy all my life and it has worked out well.

Secondly if I were to do the bulk of my rebalancing which involves selling, then I do so using my retirement accounts, again to avoid the tax implications from the gains….