8 replies on this article “Suggestion required about portfolio rebalancing”

1. nikhil141088 says:

   October 1, 2014 at 4:52 pm

   Do we include PPF/EPF in debt assets ? If we do then my debt allocation goes to 50% (I want around 25-20%). The reason being that you get additional tax savings on these instruments so can’t ignore them.
   So my question is: Does it make sense to rebalance at the cost of less PPF investment (EPF is fixed) and don’t leverage all the Tax benefits ?

   Reply
2. ashalanshu says:

   January 15, 2014 at 2:56 am

   Dear Sibin, your Eq. part related Tax liability ‘ll always be lower or near zero (15.45% for STCg and zero for LTCG) but in case of Debt part of portfolio, the tax may take a huge toll if you are in higher tax slab and STCGs are there due to market conditions.

   Please think over it with an open mind.

   Thanks

   Ashal

   Reply
3. ashalanshu says:

   January 11, 2014 at 1:59 am

   Dear Sibin, who ‘ll pay the tax on rebalancing after every 6 months.

   Thanks

   Ashal

   Reply
   1. Sibin says:

      January 14, 2014 at 9:08 pm

      Hi Ashal,
      Thanks for pointing this out. I am aware of the tax implication that may arise due to rebalancing. The current rebalancing that I have mentioned in my original question will be done anyways. I will pay the tax for that, no issues.

      From next half year onwards I will rebalance the portfolio only if the debt to equity ratio is huge.

      If the ratio change is not big enough I will only adjust the monthly contribution to debt or equity fund to make up the change, this way I will be able to possible redemption from these funds

      Thanks
      Sibin

      Reply
4. Manish Chauhan says:

   January 4, 2014 at 6:15 pm

   irst you need to see how much part of your total portfolio is this equity and debt part ? If you have huge money in real estate or some other thing, then the impact of this whole portfolio rebalancing might not make much difference to overall scenario .

   Now next point I want to make is that to not get attached to the exact ratio . If even if your debt : equity ratio gets to 35:65 or 30:70 , be ok with it and do not over try to fit the whole ratio in your calculations.

   Rest , regarding the balancing part, you just need to transfer money from debt to equity . I not commenting on the exact procedure for it

   Manish

   Reply
   1. Sibin says:

      January 4, 2014 at 8:18 pm

      Thank Manish.

      At this point my real estate investment is 0.

      I understood the concept of +/- 5%. I have read it from the blog and your book. Currenly the ratio is 48:52 which I suppose to be rebalanced to 25:75.

      I have intiated STP as suggested by Srikanth to rebalance the portfolio in next 6 months. Once that is done I will be planning to only review and rebalance (if required) by every 6 months

      Thanks
      Sibin

      Reply
5. Srikanth Meenakshi says:

   January 3, 2014 at 8:22 pm

   Sibin,

   Portfolio rebalancing can be tricky at times when there are more than two asset classes. In your case, it appears to be pretty simple.

   Suppose your current portfolio value is Rs 1 lakh, you simply need to move Rs 23K from debt to equity to achieve your target ratio.

   Since you are moving from debt to equity, yes, as you suggest, it would be better to do it using an STP process over the next six months.

   Hope this helps,

   Srikanth
   FundsIndia.com

   Reply
   1. Sibin says:

      January 4, 2014 at 10:09 am

      Thank you Srikanth

      Reply

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