facebookIf I buy a fixed portfolio of asset of ETF indexes for many years but some of the ETF indexes are not doing well in some years, should I sell and buy others or keep buying to rebalance? - Seedly
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Anonymous

Asked on 21 Aug 2018

If I buy a fixed portfolio of asset of ETF indexes for many years but some of the ETF indexes are not doing well in some years, should I sell and buy others or keep buying to rebalance?

Portfolio

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When you start this, you should have an idea why you buy the ETF that forms your portfolio. So typically folks would want to cover on a global context. Say

  1. International Stocks

  2. US Stocks

  3. Singapore Stocks

  4. Singapore Bonds

Why the above 4? it is an example but you have a strategic, or high level reason. Typically, the idea is that all 4 over time, are like savings deposits. They have a positive expected return which means that over time their compounded rate of return is positive. It is just that over time, they are volatile. there are some years they are under performing there are some years they do much better.

The ideal strategy here is to rebalance those that are doing well into those that is doing not so well.

Or if you have capital injection, prioritize injection into the ones that are not doing so well.

This is a systematic buy low sell high.

Now if you have no idea what is your strategic idea in the first place, then its more challenging to answer the question above.

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Davin

Davin

Level 12. Master

Answered on 09 Mar 2020

Depends on which ETF indexes you are buying. If you believe that the index will grow in future, then you can keep it. Otherwise, I will sell it off and restart if I admit i made the mistake in the past.

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Can you clarify
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MT2020

MT2020

Level 11. Master

Answered on 09 Mar 2020

If you have been dca into the index, you should continue buying into the dips as once the market rec...

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