Review: Do This One Thing Each Year If You Want a Better Retirement

Review: Do This One Thing Each Year If You Want a Better Retirement

Your asset allocation is the blueprint for your portfolio. You want to spend the time to make sure that you design the right portfolio for you. But your asset allocation is static – the markets are decidedly not. They are constantly bouncing around. Which means that your asset allocation is bouncing around right there with them. It doesn’t matter how perfectly designed your asset allocation is if that’s not what you are actually invested in. What you are actually invested in is what determines your returns – not what you have written down in your IPS. So, you need to monitor your portfolio and keep everything in line. This is rebalancing. Rebalancing can feel counterintuitive – you’re selling off the stuff that did well and buying more of the stuff that did poorly (generally) – but it’s crucial to maintaining the right level of risk in your portfolio. Without rebalancing, your portfolio will start to drift further and further away from where you want to be. People argue about how, and how often, to rebalance their portfolios. And there’s no perfect answer. If you’re managing your own portfolio, annual rebalancing is perfectly fine. In most years, you won’t see too […]

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Source: Retirement Researcher

Review: Do This One Thing Each Year If You Want a Better Retirement

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