Hello and thank you for stopping by today. We are going to talk about rebalancing portfolios today.
My name is Tina Anders, I am the Fee Only Certified Financial Planner here in Petaluma, California. Anders wealth management is my wealth management firm serving primarily Sonoma County and Marin County in California.
Rebalancing, what’s it all about?
Rebalancing is the process of realigning the weightings of a portfolio of assets. Rebalancing involves periodically buying or selling assets in a portfolio to maintain any original or desired level of asset allocation and or risk. In short, what that means is if you have a portfolio 50% stocks and 50% bonds, and the stocks outperform bonds. Then all of a sudden, you might have 70% in stocks because they’ve grown and then bringing your bond portfolio down to 30%. So, now you have a 70/30 allocation. You want to rebalance it to bring it back to 50/50, which would be in this example, your target or desired allocation.
While there’s no required schedule for rebalancing a portfolio most recommendations are to examine the portfolio the allocations at least once per year. It’s possible to go without rebalancing a portfolio but it’s not advisable at all.
Rebalancing gives investors the opportunity to sell high and buy low thereby taking the gains from the high performing investments and re investing them in areas that have not yet experienced such notable growth. Rebalancing is a very good idea. It shouldn’t be done at least once per year. I highly recommend it.
And if you have more questions or comments, please do so below if there’s a topic on which you would like me to do a video, please also let me know. Thank you again for stopping by, Tina Anders, Anders wealth management in your corner always.