A How-To Guide for Rebalancing

Don’t Let Your Portfolio Get Lopsided

Have you checked on your portfolio lately? According to a recent survey, 1 in 4 investors said they hardly ever look at their portfolios. And when it comes to rebalancing — a proven strategy to help investors stay on track — only 40 percent of those surveyed were proactively rebalancing their portfolios.1

It’s easy to “set it and forget it” when the market is humming along, but this could be a mistake down the road. Over time and as a result of market performance, the value of various assets within your portfolio may shift, and your investment goals and risk tolerance may change as well. Rebalancing helps ensure the investment mix in your portfolio is on target and aligned with your goals.

Ready, Set, Rebalance!

Rebalancing involves shifting the mix of assets in your portfolio — stocks, bonds and cash equivalents — to maintain the asset allocation that’s appropriate for you. For example, if stocks do particularly well one year, your portfolio may become more heavily weighted toward equities than you originally intended. To rebalance, you may want to sell some stock and reinvest the money in bonds or cash equivalents.

Follow these basic steps to rebalance your portfolio:

Review your ideal asset allocation targets

Choosing the right asset allocation depends on your risk tolerance, return needs and time horizon. Generally, investors with a long time horizon and high risk tolerance may allocate more of their investments in stocks because they have time to weather ups and downs of the market. Those nearing retirement often favor a more conservative approach with a higher percentage invested in bonds and cash equivalents. An investment professional can work with you to determine an asset allocation that’s right for you.

Check your current investment mix

Find out where your allocations are now, and compare with your targets. Has your portfolio shifted?

Decide on a plan for rebalancing

You can sell assets from classes that are outperforming the others, buy more of asset classes that are underperforming, or some combination of the two. In an employer-sponsored retirement plan or other systematic investment program, you may choose to simply redirect future contributions to asset classes that are underrepresented until you reach your target allocations.2

Commit to rebalancing regularly

Some experts recommend rebalancing annually. Mark your calendar to bring your portfolio back in alignment in April (tax time), December (year-end) or another date you choose.

Look to Us

If you need help rebalancing your portfolio, contact your Client Advisor. We can help you find an appropriate asset allocation for your goals, risk tolerance and timeline.

1 Source: Wells Fargo/Gallup Survey, Sept. 28, 2017.

2 A systematic investment program cannot guarantee a profit or protect against loss in a declining market. You should consider your ability to continue investing during periods of low-price levels.

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