Annual Rebalancing TheAnswerIs.ca Model Portfolio
TheAnswerIs.ca Model Portfolio comprises six ETFs, (to see the Model Portfolio take the Ready to Invest quiz on the website https://theansweris.ca/profile.php ).
The AnswerIs.ca Model Portfolio is rebalanced once per year in October.
Over the course of the year the Model Portfolio accumulates cash from the ETF dividends / distributions. Further, some ETFs perform better than others.
To invest the dividend income accumulated throughout the year and to rebalance the Model Portfolio, we need to buy more of the ETFs that have not performed well, and sell some of the ETF’s that have performed comparatively well. It may seem counter intuitive to sell a portion of the “winners”, and buy more of the “losers”, but in effect, this process ensures selling at high ETF prices and buying at low ETF prices.
Overall, TheAnswerIs.ca model portfolio was up 25.28% over the last year. All six ETFs were higher, up by between 7% and 33%. The two worst performing ETFs were Utilities and Emerging Markets, up by only 7% and 10% respectively. The best performing ETF, up 33%, was Real Estate, (which happened to be the worst performer last year, and as a result, we used most of last years dividend income to buy XRE last year, which happened to work out very nicely 😊). The remaining three ETFs were all up between 24% to 28%.
To rebalance, (Login and go to Add Money / Rebalancing Tab) we simply insert the current portfolio value in the space provided and follow the instructions to rebalance. As a result, we sold a small amount of the Real Estate ETF that did comparatively well, and purchased more of ETFs that did comparatively poorly over the last year, i.e. Utilities and Emerging Markets.
That’s it, time to put TheAnswerIs.ca Model Portfolio on cruise control until next October!
Invest long-term and prosper.