Last week at the Stansberry Conference in Las Vegas, a Lifetime member asked us how to use the Risk Rebalancer to pull money out of the market.
We’ve never had anyone ask us that and it’s a great question.
It also makes good sense.
If you have an IRA and are over age 70½, you know that you have to take a required minimum distribution (RMD) annually. So, why not rebalance your portfolio and take the RMD at the same time? It’s a great idea.
Even if you don’t need to take the RMD and just want to pull some money out of your stocks, it makes a lot of sense to optimize your risk at the same time that you pull money out of the market.
Fortunately, TradeSmith and his development team have already figured it out.
For this example, let’s look at a sample portfolio that contains stocks and cash. The portfolio has about $79k in stocks and $10k in cash.
This is the first page of the Risk Rebalancer. The key number here is the $79k in stocks invested. If you want to pull $5000 out of your investments, that will leave you with $74k in stocks. Here’s how to do it.
Do you see the pencil icon next to the cash amount? Click on this and then enter the amount that you want to withdraw as a negative number.
After entering the amount you want to remove from the market, click “OK”.
You’re now telling the TradeStops program that you want to remove $5000 from the current stocks you own.
When you click on the green “Rebalance” button, the Risk Rebalancer is going to rebalance the stocks so that the total of the stock positions will be $74,385.87.
This is what the screen looks like after the Rebalancer has been run. Click on the “Steps to Take” tab.
You can see that the “Total Value” is now $74,385.87. The “Steps to Take” tab shows you the new number of shares you should hold in each position.
You can save this new allocation by clicking on the “Save as New Portfolio” button.
Here’s the new portfolio. Be sure to add the $15,000 cash that is not showing up here ($10,000 that was in the portfolio initially and the $5000 that we sold).
If you need to take an RMD or are just concerned about the markets, this is a smart way to accomplish your financial goals and remain intelligently invested. This also lines up with TradeSmith’s approach that rebalancing annually is sufficient for many, if not most, investors.
Now, you can take your RMD and rebalance at the same time.
Sincerely,
Tom Meyer,
Member Services, TradeStops
