Retirement Income Toolbox

May 16, 2016

Rebalancing, What’s in it for Me?                                    

Rebalancing a portfolio is buying and selling of some of your stocks, bonds and cash that are in your portfolio.  Why would you want to do this if your portfolio seems to be doing ok? When you and your financial advisor set up your portfolio, it was important that it had a risk category that is right and comfortable for you.  As time progresses and the portfolio changes, the percentages of equities to bonds can stray from that risk category that was chosen.  In the early years during the accumulation phase this might not be a concern and rebalancing may not be deemed necessary by you and/or your advisor.  During the later years when someone is in the withdrawal phase and wanting a less risky as well as less volatile portfolio, rebalancing might certainly be warranted as well as possibly a change in investment objective and the kinds of securities in your portfolio, more suited for income generation.

To assure you keep your portfolio up to date with your investment objective and risk tolerance we feel it is important to have a dialogue with your Financial Advisor at least once a year on this subject.  Going in for a review of your accounts on a regular basis is certainly going to help keep you and your portfolio on the same page.

Not a current client of ours? We offer free portfolio reviews for potential clients to see if their current portfolio matches their investment objective and risk tolerance. For more information, contact me: or 805-987-8938, option 1 and then option 2.

Please note that rebalancing investments may cause investors to incur transaction cost and, when rebalancing a non-retirement account, taxable events will be created that may increase your tax liability.  Rebalancing a portfolio cannot assure a profit or protect against a loss in any given market environment