MNet,

Let me give you the SIMPLE VERSION.

If a person do ASSET ALLOCATION, for example, 60/40 = 60% stock and 40% bond.  If the stock went up and exceed the ratio aka 65/35, you sell 5% of your asset in stock and buy bond to bring down to 60/40.  And, vice versa.  This is THE MAGIC.  You do not have to watch the market.  The FIXED RATIO will tell you.  Pension fund like EPF/KWSP and insurance companies invest this way.

A person either do ANNUAL re-balancing or re-balanced when the investment is off the ratio too much.

I had DETAILED EXPLANATION of either approaches on THIS THREAD.

Dreamer

Thanks for sharing this.

It seems like only US situ assets would fall under the Estate Tax as a non-resident (ie US domiciled ETFs, cash in broker account)

You could get around this by buying ETFs from different exchanges

Eg. Instead of SPY, buy VUSA (GBP) / VUSD (USD) on the LSE - this also gets around the 30% Withholding tax a bit - as the ETF is Ireland domiciled it internally pays 15% rather than 30% in its holding and dividends are paid out gross.

I'll worry about this when I get older, if I were to die tomorrow I don't think anyone would know where I have my savings / broker accounts anyway 

Well from what I read on the estate taxes - US domiciled ETFs are classed as US situ assets, as is cash kept in a broker account, so one should be able to stay underneath the $60K threshold by switching some holdings over to ETFs not traded on USA exchanges , such as Ireland domiciled, or Luxembourg domiciled.

As you get older it would also be possible to transfer holdings out to another broker - eg. TD International (Luxembourg) I have an account there too but it's not currently being used due to the high trading fees - however it may be an option to transfer there later (I'm only 27, not too concerned about estate tax yet!)

Yes - I have Interactive Brokers, TD Ameritrade, TD International (not used yet)

VUSA/VUSD actually has lower expense ratio by 0.02% than SPY for example, only downside is trading charges are a bit higher on LSE compared to US markets. Anyway with IB you have plenty of options, can build up portfolio of ETFs which aren't US domiciled then when getting older transfer over to Luxembourg based broker for example.

Other option seems to be to set up an IBC or trust offshore and hold your investments there .. might be worth looking at if holdings become large

TDAM I use for commission free ETF and enrolled in DRIP which IB doesn't offer

FYI, IB charge is waived with balances over $100K

I have some BND

But still quite cash heavy at present - ready for any dips 

the99percent1,

I DO NO THINK that you get IT.

Let's say that the ratio is 50/50 and you are putting $1,000 into your asset allocation every month.  How could ANYTHING that you said will happen?? Show us...

<Asset location does not make sense. At what point do you adjust your ratios? One day? a week? a month? >>

If you READ the whole thread, you will know that it is either

A) Once a year

or

B) Based on the 5/25 re-balancing rule.

<< A better way of doing this is to time your ETF investment at a good entry point and leave it 100% as Stock.. When markets begin to shift, then switch some to Bonds or buy up cheaper ETFS..>>

This is BASED a BIG ASSUMPTION.  A person know when to TIME the MARKET.  99+% of the people DO NOT KNOW. MAJORITY of the fund managers DO NOT KNOW either.

Dreamer