Rebalancing Pension Funds

[Ndiddy]

Within 10 years of possibly needing to access Defined Contribution pension money, how often should one rebalance to your desired asset allocation? More than once a year? Can you rebalance too often?

 

[Steven Barrett]

We rebalance if there is a change of asset allocation +- 3%

And yes, you can rebalance too often. The administrators in the life company will just get annoyed with the constant requests to sell a few quid in one fund and buy into another.

The purpose of rebalancing is to prevent investment drift. If you are 1% or 2% off the original asset allocation and there is a market crash, it is not going to make much of a difference to your valuations. If it is over 10% off the original allocation, you will notice it more.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

 

[Brendan Burgess]

Hi ndiddy

Are you really asking whether you should move to cash as you approach retirement?

If you are not buying an annuity, you shouldn't.

Brendan