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Read Bengen's book and you may learn a few things. Basically Bengen says the funds being withdrawn from Stocks and Bonds are independent of your target allocation.

As an example - Stock have gone up and down. Bonds have paid dividends that are in cash which is a fixed income asset. Your stock may have paid dividends that are either in cash or reinvested. In any event, let say your portfolio at the time of withdraw is 66% stocks and 34% fixed income -- so if you are going to withdraw $2,000 -- you withdraw $1,320 from the equity side and $680 from the fixed income side. Note: This withdraw system applies if your target allocation is 50/50, 60/40 or 75/25.

The reason for higher returns when rebalancing is less frequently is very simple. Rising markets tend to last longer than falling markets and certainly longer than 12 or even 24 months -- so let your winners run and you will take some cash off the table through the withdraw process. In a falling market, the worst thing you could do would be to "move" fixed income funds over to equities - that just increases your rate of loss.

Read the book and look at the data. Sorry to sound like a broken record, but I was very surprised and rebalancing frequency does make a significant difference over a 20 year period.

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