Rebalance Portfolio or Wait It Out?

March 25th, 2008  |  Published in General

If you’re like me, you’ve probably taken a look at your retirement assets and wondered if now is the time to re-balance your portfolio given all the blood-letting the stock market has done. I mean the name of the game is to buy low and sell high right? Stock market has gotten pretty low, with some recovery in recent weeks, so now should be a good time to re-balance or plow some more funds into the lower assets right?

Wrong.

Yes, I was very tempted to change things, but I stopped myself because it wasn’t part of the plan. I usually rebalance my retirement assets once a year, in the middle of the summer (my first employer’s benefits package was a July 1st to June 30th year), and make all my decisions then. Since it’s only March, to start the re-balancing early would be falling into the trap of trying to time the market.

However, sometimes you do need to be agile and make course corrections mid-year and a “once a year” analysis is simply too slow, right? Yes, I totally agree, you do need to have some agility in your plans but my retirement assets are composed entirely of mutual funds and not individual companies. If I owned individual companies, and I do in regular taxable brokerage accounts, I don’t make decisions annually, I make decisions as they come up. However, with retirement assets, assets I can’t touch for 40 years, tucked away into broader mutual funds, I say once a year is plenty.

  

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