Threshold Rebalancing: 5% rule for calmer ETF investing
How to use drift thresholds instead of guessing market tops and bottoms.
A simple way to reduce emotional decisions: only rebalance when allocation drift exceeds a fixed threshold.
Baseline setup
- Target allocation: 70/30
- Rebalance trigger: ±5%
- Check frequency: monthly or quarterly
You reduce overtrading while still controlling risk creep during long trends.