Project Description

Please Don’t Forget to Rebalance Your Portfolio

The act of rebalancing your portfolio is likely the most important aspect of managing your wealth. At its core, rebalancing functions to minimize risk. However, the benefits don’t stop there.

Rebalancing your portfolio is the act of selling assets that have increased in value and selling the assets that have declined. This process ensures that your portfolio is always aligned with your goals.

Just as rebalancing will assist to minimize your risk, it also has other benefits that come along with it. Rebalancing inherently imposes discipline on your investment decision and prevents you from trading based on emotions. It also will naturally assist you to buy low and sell high. After all, that’s Investing 101.

In order to bring your portfolio back to balance, you first need to establish your Asset Allocation. In other words, how much of your portfolio will be made up of stocks, bonds, cash, real estate, & other assets. From there, you can establish 1 or 2 pre-determined dates to review & re-balance the portfolio if your allocation is off by a certain percentage. If you’re working with an adviser, or if you’re consistently monitoring your portfolio, you may choose to have a more opportunistic rebalancing strategy that focuses more on the tolerance as opposed to pre-determined dates.

All in all, please don’t forget to review and rebalance your portfolio. The market returns over the last year, and even last few years, have been tremendous. That makes it even more important to rebalance in order to minimize risk.

If you would like assistance managing your portfolio or developing a solid strategy to review & rebalance, contact us today.