# Rebalancing: How do I do it?

 Guest post by: Sean Hyman Become an Author Tweet

Euro Dead Zone! - By Sean Hyman

 Name: Email:

In one of my previous articles "The Art of Rebalancing", I wrote all about the reasons why you should be rebalancing your portfolio on a regular basis.I wrote about what rebalancing is and when it should be done. The "how" is a little bit of a more complicated process to explain, but once you get the hang of it, it is an easy process.

I will be working with some assumptions throughout this article, but know that they might not completely apply to your portfolio. Feel free to email me with any questions you may have with how to adjust the scenarios below to your portfolio.

Assumptions: Portfolio \$100,000; asset allocation 50% bonds / 50% stocks; all trades made in a retirement account so taxes are not a consideration; trading fees are negligible.

Firstly, you'll be setting up a spreadsheet with your various columns. Firstly list out your target portfolio by funds - you shouldn't really need many funds to build a diversified portfolio, just try to keep each fund under 10% of your total portfolio. I have used generic titles for mine, but put the actual titles in for yours, and maybe an indication of what type of fund they are (Small Cap, Large Cap, Intermediate term bond, etc.)

In the blue box should be the total amount of your portfolio, and for this example it is \$100,000. In the boxes next to each fund, there is a formula multiplying the \$100,000 by the target percentage (in this case, we're keeping every fund at 10%). At this point, when you go to update your portfolio total, the fund target values should change to what they should ideally be.

In the column next to this are the actual values of the fund positions (blue text). Your next column is the value of the individual funds (blue text) divided by the total of your portfolio (total of blue text). This will give you actual weight of each fund in your portfolio. Your final column shows you how many dollars need to be added or subtracted to the fund to make it match its weight.

Now this is a simplified version of how rebalancing could be done by the everyday investor with a spreadsheet. It bears repeating that this process should be done on a frequent basis (e.g. quarterly) so your portfolio does not get so out of balance, like our example.

When your portfolio becomes larger and you need to add more funds to add diversification to your portfolio, then this process can become challenging. Lots of financial advisors use sophisticated software programs to work through the process for them, and as long as they are reviewing your portfolio with your goals in mind while the program is doing this, then it may be worthwhile paying them to do this for you.

Finally, it is wise to stay on top on top of the markets and the economy, due to the fact that relationships between investments can change, and we will see more and more of this as economies becomes more and more integrated in the global economy.

## Related Articles

Are Balanced Funds Really Balanced?
Let’s talk about that dirty “R” word – R E T I R E M E N T
Asset Allocations Insufficient In The New Economy
Rethinking Investing: Common-Sense Rules for Uncommon Times
Managing Foreign Exchange Risk: The Search for an Innovation to Lower Costs to Poor People
Seven Practices of Successful Teams in Sport and Business
Creating an Effective National Accounts Program

Home > Personal-Finance > Sean Hyman > Rebalancing How do I do it >

Euro Dead Zone! - By Sean Hyman

 Name: Email:

 About the Author: Sean Hyman RSS for Sean's articles - Visit Sean's website See my You Tube videos here that accompany my articles: http://www.youtube.com/results?search_type=&search_query="Sean+Hyman"&aq=f myWealth.com provides affordable, online personal finance courses that enable everyone to effectively manage their money by making sound financial decisions. Making sound decisions is a prerequisite to achieving your financial goals and becoming financially secure. myWealth.com offers numerous courses that cover investing, managing ones personal finances and currency trading. myWealth.com's team of instructors, led by Sean Hyman and Bob O'Brien, pride themselves in thoroughly answering questions and patiently guiding each and every student through the course. Our instructors have years of experience trading various financial markets. They also have years of experience providing financial planning advice to individuals like you. Click here to visit Sean's website. More from Sean Hyman Its Obamas Economy Now Black Gold Worth More than Real Gold Market tells Bernanke Take a Hike Interest Rates and Politics ETF For Life

## Related Forum Posts

 Tweet
Featured Expert

Trending Articles

 Today’s Profiles of Entrepreneurship in Africa: Aliko Dangote Is Your Business Tough Enough to Survive Recession? Features of Kall8 Phone Service Catch Someone Doing Something Right How to Listen like a Detective

Worksheets
By: Evan Carmichael

owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!
 Name: Email:
Popular Articles

Setting a PR Budget

Thrilling Thursday - Life After Demotion

3 Health Insurance Misconceptions

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for