Is it important to rebalance your investment portfolio?
There are a number of suggested formulae: Keeping the ratio of stocks and bonds in your portfolio at 50%/50% or 60%/40%, and so on. What is optimum is variable, depending on many personal factors.
You hear about periodic rebalancing when that ratio changes due to market moves. But how does it improve your investment success?
The truth is, rebalancing the ratio of stocks and bonds owned, is one of over 1,500 investment strategies I have investigated. It has not always been a profitable strategy for all types of stock or bond markets. It can cause overall losses, as it did in the 2008 and early 2009 financial meltdown, as well as some past cycles.
My suggestion: Evaluate your common stock and bond securities holdings in a flexible manner and not as a set ratio, depending on your age, total assets and retirement outlook.
Plus your disciplined investment strategy plan. Furthermore, helter-skelter portfolio adjustments can cause serious tax charges in non-retirement accounts. ( See the Earl J Weinreb NewsHole® comments.)
No comments:
Post a Comment