However, it is likely you are not making an adjustment that should be made. Most investors do not rebalance their portfolios frequently enough. If you entered last year with a 60% stock/40% bond mix, your portfolio is likely now close to a 50%/50% split. Without rebalancing, your portfolio will miss the upside you were looking for with your original asset allocation.
History shows rebalancing will increase the return of a portfolio and decrease the portfolio's risk over time. The following chart illustrates this utilizing data from 1970 thru 2006.
Additionally, according to a study conducted by Schwab, a 60%/40% portfolio of $100,000 would have grown to $2.9 million from 1970 to 2008. However, if the portfolio was rebalanced annually, the portfolio would now be worth $3.5 million.
Speak to a financial planner or investment manager to learn how to setup automatic rebalancing in your retirement accounts.
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