It seems to my amateur mind that if I “rebalance,” what essentially happens is my entire portfolio is liquidated then immediately “rebalanced” to my new AA. This seems like a net negative because I’m going to end up with fewer shares of, say, VTI, than I had before, even if current value is higher.
Specific example: VXUS has been a big drag on my 529 funds. I have read all the arguments in favor of keeping international but I have moved to all S&P 500 for my equity portfolio in other accounts and I’m happy. I’d like to do the same in the 529 but my only option is to “re-allocate existing funds.” This would mean SELLING all my VTI (along with the VXUS) then buying it again to make up 100% of my equity portfolio. I would be giving up shares of VTI I’ve had since 2012 to buy fewer shares at current prices. What I really want is to just sell my international stock for domestic stock but that doesn’t seem to be how it works. I can’t choose to liquidate one fund only and purchase another. I think rebalancing in my 401K works the same way.
Am I missing something? (probably!)
Specific example: VXUS has been a big drag on my 529 funds. I have read all the arguments in favor of keeping international but I have moved to all S&P 500 for my equity portfolio in other accounts and I’m happy. I’d like to do the same in the 529 but my only option is to “re-allocate existing funds.” This would mean SELLING all my VTI (along with the VXUS) then buying it again to make up 100% of my equity portfolio. I would be giving up shares of VTI I’ve had since 2012 to buy fewer shares at current prices. What I really want is to just sell my international stock for domestic stock but that doesn’t seem to be how it works. I can’t choose to liquidate one fund only and purchase another. I think rebalancing in my 401K works the same way.
Am I missing something? (probably!)
Statistics: Posted by meadowrue — Sun May 19, 2024 11:56 am — Replies 19 — Views 491