Reply to Would you choose bond or "real 3%" investment if you were me?

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Reply to "Would you choose bond or "real 3%" investment if you were me?"

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[quote=Anonymous][quote=Anonymous]Hey WB colleague here: can someone help me understand what does the rebalance me? If I choose from 50% sp500 50% real 3% to 100% real 3%, what happens to the shares of sp500 I bought before? Will the existing shares keep growing? It's very confusing because when they rebalance, they say they rebalance the entire balance, not just the new purchase balance.[/quote]

They rebalance the whole thing = they sell everything and re-purchase. So basically, they sell your SP500 and buy real 3% with it. If you want to "keep what you bought in the past", you need to calculate what % that orignal investment would keep representing each month. Lets say you currently have 1000$ invested in SP500 and 1000 in real 3%, and you put 100$ in every month starting september, you need to choose for your sept allocation something like 47.5% SP500; 52.5% real 3%. And then in October 45% SP500, 55% real 3% etc...

I thought about it but it was too complicated. I just switched everything to real 3% at the time.

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