By MoneyBees
See how far your portfolio has drifted from your target mix, the trades to get back on target or where to put new cash without selling, and what the trades cost on SGX.
Buying and selling to bring each part of your portfolio back to the mix you chose. If you want 60% shares and shares grow to 70%, you sell some shares and buy the parts that fell behind.
Multiply the portfolio's total value by each target weight, then subtract what you hold now. A positive answer is the amount to buy, a negative one the amount to sell.
Common rules are once a year, or whenever any part drifts more than a set band, such as 5 percentage points. Rebalancing very often adds costs without much benefit.
Yes. Put new cash into the parts that are below target. It avoids selling fees and works well if you invest every month. Large drifts may need more cash than you have.
Your broker's commission or minimum fee, SGX's 0.0075% trading fee and 0.0325% clearing fee, and 9% GST on all three. On a S$10,000 trade at 0.08% with a S$2 minimum, that is S$13.08.
Individuals in Singapore are generally not taxed on gains from selling shares held as investments. If buying and selling shares is your trade or business, the gains can be taxable.
The gap between a holding's share of your portfolio now and its target, in percentage points. A 60% target that is now 70% has drifted 10 points.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).