Seven months down, all contributions made as intended. However, month seven brought another round of quarterly distributions. This prompted the question of what to do with those distributions. They would be reinvested, but how?
I don’t believe I’ve touched on what to do about rebalancing. The lowest impact option in this case I think is to rebalance with contributions, which is what I did. Obviously running a three fund portfolio with global bonds, MSCI World and MSCI World small, it’s the small that will be the most volatile, yet also the most likely to offer the best returns.
In six or seven months, global small had well outgrown global bonds. Taking action now meant less of an issue if there’s a correction, although bond prices are copping it right now anyway, but this about discipline. So, I rebalanced with contributions and brought the three funds closer to their initial 33.3% x 3 breakdown.
Progress after contributions. These are cumulative.
Portfolio End July: -0.44%
Portfolio End August: 1.03%
Portfolio End September: 0.46%
Portfolio End October: -0.14%
Portfolio End November: 5.15%
Portfolio End December: 5.07%
Portfolio End January: 4.95%
Until next month!
Disclaimer: The discipline project is a personal endeavour and should not be constituted as a financial strategy that anyone should follow. It is more a study in repetition and shutting out the noise in pursuing a financial goal, than any focus on portfolio construction. Anyone looking to build a portfolio should seek financial advice to find out which strategy is right for them, if you are seeking financial advice then you should consider one of Australia’s best financial advisors who may be able to help you identify your goals and put in place a reliable strategy to pursue them.
