When to leave your portfolio alone
The common wisdom is that the best way to manage your portfolio is to “set it and forget it”. I’ve heard a wealth manager joke that his most successful clients were the ones that forgot the password to log onto their 401(k). While white-knuckle changes to market crashes are notorious for leaving people worse-for-the-wear, never touching your portfolio is also a less than optimal strategy. Ideally, you’d choose an asset allocation percentage that you’re comfortable with and only adjust your portfolio when it drifts from your preferred ratio. While this sounds simple in practice, it can actually be difficult to execute correctly.
If I wanted a fund to be 20% of my portfolio, there was no reason to trade the moment it reached 20.5%. Markets are noisy. My portfolio didn’t need constant correction.
~ Mark Gardner Humble Dollar
In this article, Mark Gardner discusses his own difficulties in properly rebalancing his portfolio. Continually rebalancing your portfolio can create stress, and have important tax consequences. On the other hand, if you never rebalance your portfolio, you can have a lot of drift. Gardner talks about how when he was younger he was constantly rebalancing his portfolio but is now taking a more hands-off approach. He found peace of mind when he discovered a strategy made popular by Larry Swedroe. In this method, you don’t rebalance unless the amount of an asset changes by 5 absolute percentage points or 25 percent of its target allocation, whichever is smaller. For example, if your portfolio consisted of 80% of the SP500, you would rebalance when this percentage became 75% or 85% (5 percentage points). But if your portfolio had 10% in cash, you’d rebalance when your cash position became 12.5% or 7.5%. (25% of allocation). Gardner also emphasizes that you should try to rebalance your portfolio with your cash flows, from drawing cash from positions with a higher allocation than you want and putting your capital into allocations below their target. This reduces the number of trades required and helps reduce unnecessary capital gains taxes.
$150,000 or $1.5 Million or $5 Million
How big is your portfolio? Do you think that money management depends upon the size of your portfolio or is it just a matter of other factors like your age and risk tolerance? Sometimes we can be so laser focused on our own situation that we don’t stop and think about how we’d manage money in a different situation. If you haven’t zoomed out and looked at the big picture for a while, you might be interested in this article.
Do you want to sleep better at night? Give away all of your money to charity? Grow the portfolio for the next generation? Whether you have $150k, $1.5 million or $5+ million, the question of how much risk to take is a personal one.There are quantitative metrics to use but the qualitative piece will always matter more.
~Ben Carlson, A Wealth of Common Sense
In this article, Ben Carlson explores three different financial situations from three different listeners who answered questions. The questions all came from people looking at completely different wealth brackets- $150,000, $1,500,000, and $5,000,000. In the first case, the person had $150,000 in cash and was trying to decide the best way to invest it. Not only whether he should invest it all at once, but how to turn it into a stable portfolio. The $1,500,000 case study examined someone whose parents were gearing up to retire with “only” 1.5 million dollars. Carlson points out that $1,500,000 for a couple at retirement age puts them in a very high percentile of net worth individuals and that they should be happy with their savings. He then walks through their retirement math to help them feel more comfortable with their portfolio. The final question deals with what’s the optimal strategy for a case when you have $5,000,000+ in assets and only need a small fraction of it to live on. Should you be super aggressive since you can withstand a 50% drop without it impacting your life? This is an interesting question and Carlson does a thorough job of explaining an optimal strategy for this situation.
New Caregiver Tax Credit Proposals Could Save
The unfortunate reality is that at some point we all reach a point where we can’t care for ourselves. For many adults that need care, family members and friends are often needed to step in and help provide that care, even if professional caretakers can be hired. Caring for a family member doesn’t just require time, but these caretakers often use their own money to help provide for the adult dependent. Some state governments recognize the financial burden that caretaking can represent and have provided tax breaks for adults that work and take care of family members. There is now legislation looking at providing tax incentives at the national level as well.
Nearly eight in 10 family caregivers report paying caregiving expenses out of their own pockets, spending an average of more than $7,200 annually while often balancing jobs and family responsibilities.
~Drew Blankenship, SavingsAdvice.com
In this article by Drew Blankenship explores pending legislation to provide a tax credit for working Americans who also care for another adult. The legislation, called “Credit for Caring Act” was re-introduced in March of 2025 and would a nonrefundable credit equal to 30% of qualified caregiving expenses exceeding $2,000, up to a maximum credit of $5,000. This credit would not directly compensate caregivers for their time, but for other expenses such as respite caregivers or modifications to their house to make it suitable for their dependent. While this would be a welcome change for people in this situation, Blankenship points out that the actual cost of caregiving well exceeds the trackable expenses. Many caregivers need to work a reduced schedule or forego promotions because of their caretaking duties. If you provide care to a loved one, you’ll want to follow the fate of this legislation.