Rebalancing or NOT Graphs

Here are graphs of 30-Year Historical Surviving Withdrawal Rates HSWR with 50% and 80% stocks with and without rebalancing versus the percentage earnings yield 100E10/P.

HSWR50T2 has a fixed 50% stock (S&P500) allocation. It is rebalanced annually. The non-stock component is TIPS at a real interest rate of 2%. Expenses are 0.20% of the current balance.

HSWR50T2n starts out with a 50% stock allocation but it is not rebalanced.

HSWR80T2 has a fixed 80% stock allocation. It is rebalanced annually.

HSWR80T2n starts out with a 80% stock allocation but it is not rebalanced.

Rebalancing or NOT 50%

Rebalancing or NOT 80%

Rebalancing helps a little in times of high valuations (low 100E10/P) and hurts in times of low valuations (high 100E10/P).

Have fun.

John Walter Russell
September 29, 2008