However, investors need to keep in mind commission-fees when rebalancing their portfolios. If an investor messes with their portfolio set up too often, they run the risk of accumulating costly trading fees that could eat away at the potential benefits of rebalancing in the first place. [Popular Commission-Free ETFs on Schwab OneSource]
Consequently, some financial planners recommend rebalancing at the end of each calendar year, some review portfolios quarterly, and others reset holdings if their target mix is off by 10% or more. According to Vanguard Group, investors should monitor holdings annually or semiannually, rebalancing when target allocation drifts by 5% or more.
Furthermore, investors can check if their brokerage platform offers commission-free trades on ETFs to help minimize costs. For instance, Fidelity, TD Ameritrade, Charles Schwab, E*Trade and Vanguard all offer a range of commission-free ETFs on their trading platforms. [Six Popular Commission-Free ETF Trading Platforms]
For more information on investing in ETFs, visit our ETF 101 category.
Max Chen contributed to this article.