A reader asked John Bogle if he should rebalance his portfolio to the original asset allocation when adding new money or divide the new money according to the original asset allocation even if his portfolio might be out of whack. Mr. Bogle offered a surprising answer:

Rebalancing is a personal choice, not a choice that statistics can validate. There’s certainly nothing the matter with doing it (although I don’t do it myself), but also no reason to slavishly worry about small changes in the equity ratio. Maybe, for example, if your 50% equity position grew to, say, 55% or 60%.

In our portfolios that are mostly invested in ETFs, I simply add new money to a lagging asset class to bring the portfolio roughly back to the target and normally do not bother about deviations of up to 5%. In portfolios where no new money is being added, Mr. Bogle says it pays to be real lazy and not rebalance at all:

Interestingly, failing to rebalance never cost more than about 50 basis points, but when that failure added return, the gains were often in the 200-300 basis point range; i.e., doing nothing has lost small but it has won big.