You have a well-diversified portfolio that is offering good returns and your retirement plans are well on track. Now what? Is that it? Sit back relax and watch your money grow?

Well, partially yes, but like anything, regular maintenance is needed to keep it functioning in tip top condition. This applies to your portfolio as well. Your financial portfolio needs regular check-ups and maintenance with your financial adviser.

• Check-ups entail ensuring that your goals are still on track, or to change the plan if your goals have changed e.g. you planned your retirement as a single person but have recently been married or had children. You might need to increase your retirement savings to cover two people, or you might need to increase your investments to include education savings plans or a trust fund.
• Maintenance is the process of rebalancing your portfolio to its original asset allocation.

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 an original or desired level of asset allocation or risk. *

Why rebalance your portfolio?
No one can predict how the markets will perform over time.

• Rebalancing helps you get your portfolio back to its original asset allocation and to maintain the level of risk you desire.

Example: Your original asset allocation of your portfolio was 50% equities and 50% bonds with a balanced risk level. Over time, the equity portion of your portfolio has performed well, and this increase could have made the equities represent a larger percentage of your portfolio at 70%, leaving your bond portion at 30%. This puts you onto a more aggressive level of risk than you would be comfortable with. Your adviser would sell some of the equities and buy more bonds to get the percentages back to 50/50.

• Rebalancing could also mean selling underperforming assets and reinvesting in assets that have better growth potential.
• Use profits from high performing assets and buy other assets at low prices that have the potential for growth in the future. Basically the concept of buy low, sell high. This is done with a long-term approach to your portfolio.
• It reduces risk by preventing over exposure to one asset class.
• Rebalancing is especially important when you are nearing retirement, as you would normally move your portfolio from higher risk growth to lower risk capital protection.
• It develops good finance habits and a long-term savings mindset.

It is important to schedule regular meetings with your adviser to check on the performance of your investments and rebalance them. [email protected]

* https://www.investopedia.com/

Please note, the above is for education purposes only and does not constitute advice. You should always contact your deVere Acuma adviser for a personal consultation.
* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.