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Author: jamiegumm One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75835  
Subject: question about rebalancing Date: 7/31/2009 1:55 PM
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Hi all. Curious: if you're trying to rebalance a 3- or more-part portfolio to tweak back to your original allocation, in temporary contribution percentages, but you only currently figured what dollar value to add to the losers, how might the mathematical equation go.

I am a cheapy small fry Sharebuilder with three ETFs (IRA one), and, as far as I know, that may the only way to do it.

Below is my simple example from which I calculated the dollar amounts to drift it back to a hard 60-20-20. (Forgive that the amounts are so small, I do know one probably might only rebalance if they drift at least 5% from original, right?)

$1k original contribution

(original) A 600 B 200 C 200

time passes A 642 B 206 C 190
62% 19.8% 18.3%
Under my belabored calculation (I can post that if there are other dim bulbs like me, curious), I discovered that, in order to revert back to the "hard" 60-20-20, I would add 8 to B and 24 to C, making both 214, and (hopefully correct) back to the orginal.

My question, if the only option I have is to change the percentage of my automatic investment plan from the 60,20,20, I would temporarily shift, what B and C's perct. to??? I mean that's probably a dumb question?
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