At the end of May, I did my first rebalancing exercise. This required a fair amount of preparation:

1. Setting up an individual 401K under my consulting company
2. Checking my family cash flow for the next 90 days and making sure I had 120 days worth of reserves
3. Getting a home equity line of credit to cover financial emergencies
4. Moving legacy retirement funds to the appropriate (pre- or post-tax) IRA account
5. Shifting my current IRA assets to Vanguard
6. Making a table that showed where everything ended up, and what it held
7. Deciding on my desired portfolio mix
8. Considering tax implications of the restructuring that was implied by my mix
9. Executing the strategy

The exercise above required wading through admin, building spreadsheets and carefully mapping things out. It’s worth getting specialist advice from a CPA because if you screw up then you can get hit with penalties and/or trigger capital gains taxes.

It’s a pain, and finance companies do not make it easy to move your business away.

Considering fees saved, I earned $1,000 for each hour of my time. I’ve seen cases where families could save up to $10,000 per hour.

Financial inertia can be extremely costly!

My decisions were the result of this year’s reading. I started with the short, free eBook, If You Can, and worked through the author’s recommended reading.

I used Vanguard funds and the expense ratio for my portfolio is less than 0.1% per annum.

Have you asked your adviser to explain your total cost of ownership? Following my blog on expenses, a friend called his adviser, asked the question and was transferred to a call center! He’s still waiting for an answer, they said it would “take a while to pull things together.”

For what it’s worth, my portfolio criteria are:

• Simple
• Low cost to hold
• Focused on long term capital gain
• Liquid in event of capital being required
• Tax effective
• If it won’t make a difference to my overall situation then wait

Like the behavioral finance books say, it was hard to sell the equity funds with the markets at all-time highs.

Now the tough part, resist tinkering and tracking.