How often should I contribute to my retirement account and how often balance my portfolio (bonds and stocks)?
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The answer depends on many factors - your age, time to retirement, current value of portfolio, retirement goal - how much money you need, and want to live on, the expectations of inflation and your tax situation, Multiply all those factors together and divide by the time left before you die and you have an approximate correct number of times ...
You had better go see a retirement or financial planner to get exact numbers huh?!
Or If you don't wish to worry about missing out on building enough capital for retirement utilise the equity in your property to invest more - and utilise your savings to service the interest expense. Then get with a good investment manager and optimise your investment returns against your tax.
You should contribute at least once a month. If you can do it every paycheck. Remember something is better than nothing. Nowadays you can set everything on line so it does it automatically. Just make sure you max it out every year. As for rebalancing, every 12 months take a look at what you have and if somethings not doing as well as you like, ditch it and move on.
You should contribute to your retirement account every time you are paid. I know my dad has it set up where money is automically taken out and sent to his 401K. If you don't work for a company that does that then just do it yourself.As far as balancing your portfolio, you need to balance them a little more than every 12 months, especially because of the levels we are seeing in the DOW. The DOW hit its 10th record close in the last 14 trading sessions. Putting money into stocks at this point in the game is extremely risky. Bonds are looking good right now because of their yield. Back to stocks, many stocks will drop quite significantly once this bull run starts to get tired. I would suggest selling a portion of your stocks right now, but keep some invested in case the market goes significantly higher than it is now. Here's why the market could go higher: many more average investors are starting to participating in stocks since the DOW broke its all time high, which was hit 6 years ago. There might be a lot more participation and this could definitely be positive for the market.
I assume you don't own just single stocks in your retirement account. If you do, you are taking a huge risk. Try diversified mutual funds. Unless you are within about 10 years of retiring, keep at least 85% in equity. You can leave the work to professional management with an global asset allocation fund... try PAEAX or PABAX
Dollar cost averaging... if you put the same amount of money in every pay period, you will buy more shares when they are cheaper and fewer shares when they are more expensive, so your average cost per share is lower in the end. Of course, if you can, max it out as quickly as possible each year.
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