Rebalancing Portfolios

Every year I read articles about how and why you should rebalance your portfolio like this article from Advice for Investors.

I must confess that I have never rebalanced my portfolio. I do not rebalance re a balance of bonds and stocks, or even stocks within categories. I never had a balance of bonds to stocks. When I started I had more bonds. You could get a Canadian Savings Bond at over 19% so there was easy money in Bonds and GICs.

As I have said, I used to Bonds but I have not had any for quite a few years. I got bonds and GICs where interest rates were really high. I sold my last bond in 2007, which was a 30 year bond with rates of 10%. I might buy bonds in the future when interest rates improve. I will have to wait and see.

In my trading account I have always had more financials and utilities than any other category. I have had a minimal amount of resources. I generally do not look at resource stocks as long term investments. Most of my investments have been short term for resource stocks. I look at stock buying as a way of buying future income.

Since I have to withdraw money each year from my RRSP and RRIF I do have cash and near cash (GICs, Investment Savings Account) to last me 5 years with expected dividends included in my calculations. I built my RRSP account similar to my trading account. With my Locked in RRIF, I received several large amounts to invest, so I invested into stocks that were at good prices at those times.

I do take notice of what I have in my portfolio when I buy new stocks. However, to my mind a cheap or reasonably price stock beats out doing some rebalancing when I was buying stocks. I am doing some buying when I take money from my RRSP or RRIF accounts at the year-end or use my line of credit to buy stocks for my Trading Account.

I am building my TFSA account from scratch and I am not taking into account what I have in other accounts. Mostly what I have in the TFSA account are newer and smaller companies than in other accounts.

I do sell companies occasionally because I have to raise money in my RRSP and RRIF accounts because of withdrawals. But what I have been doing is to sell the stocks with the lowest yields.

On my other blog I wrote yesterday about Transcontinental Inc. (TSX-TCL, OTC-TCLAF)...learn more. Tomorrow, I will write about Enghouse Systems Ltd. (TSX-ESL, OTC-EGHSF)... learn more tomorrow.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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