How do you rebalance your portfolio if you're doing a DCA method on a monthly basis? For eg DBS Invest Saver and robos?

Which is the proper way to rebalance your overall portfolio? For eg. 80% equities of which 30% are local equities and 70% are international equities, and 20% bonds.
1. Do you sell holdings in order to maintain the 30% local 70% international in your equity portfolio? (Considering no changes to bond %) while keeping the monthly investment for each allocation the same.

Do you adjust the monthly invesment allocation just for that rebalancing month and continue as per normal the following month?

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Hariz Arthur Maloy

08 Apr 2020

Independent Financial Advisor at Promiseland Independent

Hi Matthew, rebalancing is very important in making sure you stick to your original allocation, but studies have shown that rebalancing more often than once a year didn't provide reasonable outperformance when adjusted for fees.

Instead, look to rebalance once per year at a specific date or week or maybe twice a year.

But let's say you're trying to rebalance monthly.

I wouldn't change the regular purchase but buy and sell the existing portfolio to go back to the allocation. My regular contribution should always be the correct amount.

Assuming you have $100k and you're investing $10k/mth. And your allocation is 24% Local Equity, 56% Intl Equity, 20% Intl IG Bonds.

Your regular purchase should be 2.4k, 5.6k, 2k respectively. This remains the same.

But let's say your original 100k has now fallen to 80k and your allocation has adjusted

Local Equity 24k - 18k (22.5%)

Intl Equity 56k - 42k (52.5%)

Bond 20k - 20k (25%)

I'd sell 4k of bonds to buy 1.2k local equity and 2.8k inlt equity.

If your investments was through an advisor, whether digital or human, this should be done if rebalancing was scheduled, or to be done when rebalancing is scheduled in the future.

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