Keeping Your Financial Balance

Keeping Your Financial Balance

When it comes to your investments, are you a “set it and forget it” or a “check it everyday” person? Neither is a great option! For optimal investment health, you need a healthy balance - which is why disciplined investing and contemplation of rebalancing of a portfolio may be considered.


To be a disciplined investor, you have to be in it for the long haul. Short-sighted goals may get you in trouble in you have a long term horizon. With a long-term investment attitude, the goal is to maintain a conservative growth portfolio, avoiding volatility, through all market conditions.

But what exactly is conservative growth? Conservative growth is an investment strategy that seeks to grow capital over the long term. Investors aren't looking for great increases in a portfolio in the short term, but are more concerned with wealth preservation and growth for the future. 


So, how do we accomplish that? One option may be rebalancing. For a typical investment client (though every situation is different), I usually like a 60/40 portfolio. This means having 60% invested in potentially higher risk (and higher return) stocks and 40% invested in lower risks (also lower return) assets, like bonds. This generally gives consistent returns, avoiding extreme highs and lows. The investments will fluctuate in principal and yield and, when sold, you may receive more or less than originally invested.

Sometimes though, the market does crazy things. In recent weeks, with all of the world-wide health concerns, the stock market has taken quite the hit. With world issues like that, a portfolio that started out at 60/40 can also get a little crazy! That’s where the rebalancing may be considered - buy or sell assets to even out a portfolio and striving for a happy medium - growing steadily! Rebalancing in a non tax-advantage account is a taxable event. Rebalancing does not guarantee against market risks or losses.

Periodically analyzing your investments is a great idea - Is it time for your portfolio to be reviewed? Schedule a meeting with me today!