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Dave Nadig
3:25
You can really dig in deep there and look at the historic valuations and trading ranges of all the major factors, and play around with timing ...
3:26
I feel like I've sent so many folks to that link I should be getting a referral fee.  Or at least a dinner from Rob Arnott.
Ian Crosthwaite
3:26
When the advice is given to “rebalance your portfolio” (yearly?), exactly what is meant: redivvying between stocks and bonds, or …? And does one need to rebalance their ETF holdings too in any specific way (yearly)? Thanks.
Dave Nadig
3:26
So if you think about this at the most basic level, let's say you've decided based on your goals and your risk tolerance, that you want to be 90% in the broad market, and 10% in cash "just in case."
3:27
Now this year, the market goes up 20%.  So your 90 dollar investments all just became $108, and your cash is now still just $10.
You're clearly now way over invested in the broad market, based on the work you did to decide to be only 90% in the market.
3:28
So what you should do, is say "I have $118.  I want that to be 90/10, so I need to own about $12 in cash, with the rest in stocks.
3:29
Well, you only have $10, so you have to sell some stocks, to get back to your 10% cash position
How often you do this is really up to you.  How much do you care about being over/under your targets?  How worried are you that you'll miss out or get overexposed?
If you're invested in, for instance, two highly volatile things you want to keep in some kind of balance, you'll want to rebalance very frequently.
3:30
If you're brokerage account is basically infinite time horizon and you want it 100% invested in the same thing all the time? Well, there's no rebalancing required.
Personally, I check in with things about once a quarter, and probably make a rebal trade once a year.
Buddy
3:30
if an ETF has an "averaged weighted market cap" of $60 billion, what does that mean? The average market cap of all the underlying stocks is $60 billion?
Dave Nadig
3:31
Pretty much!  Although "weighted" here means you weight the average based on how much of each security you hold.
So if you own 50% of a tiny thing, well, that brings the WAMC of the average holding down vs. owning 50% of a huge thing.
3:32
its a reasonable way of saying "how exposed to size am I"
It's always better to look with more granularity, if your curious.  So seeing the percent of a portfolio in each of the four main buckets (micro/small/mid/large) is a good second check on it.
OK, running a bit light on time, so I'll take one more and then have to hop.
Edmund Burns
3:33
Hello Dave. As investors think about the myriad aspects that can affect their portfolio/retirement, when are YOU personally are going to take Social Security? I know there are many schools of thought on that. If that’s too personal (I see you answer several whimsical questions on here), maybe you would give your 2 cents on if you think it’s going to go bankrupt/when? Thank you.
Dave Nadig
3:33
This is actually one of the hardest questions in financial planning. I'm totally serious.
If we all had faith that there would be no changes to Social Security between now and when we die, its STILL a complex decision.
3:34
I'm 52.  I could start taking money from SS in 10 years, but my "normal" retirement age is 67.  And I could hold off even further to get an implied 8% return for weighting.
3:35
If I simply believed all that was fixed, really I think waiting as long as possible is smart, because: I'll likely be in a lower tax bracket in 20 years, and I'll likely not get 8% "risk free" anywhere else.
But of course, you can run the math on taking the cash at 62 and then investing it, so there's a mathematically optimal solution IF you fix all the variables.
But the unknowns here are BIG unknowns: when will I die, how will the tax code change, and will SS remain intact.
3:36
I have absolutely NO idea on any of those three.
Luckily, I have 10 years before I have to worry about it (grin).
OK folks, thats a wrap for today. Likely no LIve chat next week, as I'll be at a meeting with a bunch of economists, but I'll repor
3:37
t back on the site from there.
Just wont be able to do it  "live" here.
Thanks for coming, and I'll see you again soon!
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