Periodic Portfolio Tuneup

Dancers form a delicately balanced pyramid

  Your portfolio is created based on your risk tolerance and investment timeline. Over time the value of each of the investments may change at different rates. Rebalancing is the process of buying and selling portions of your portfolio in order to set the percentage of each asset class back to its original state. In addition, if your investment strategy or tolerance for risk has changed, rebalancing can be used to readjust the weightings of each security or asset class in the portfolio to fulfill a new asset allocation.
  When rebalancing, we are generally selling investments that have increased in value and look for opportunities to buy things with low prices. It is also an opportunity to look for investments that are not performing as expected or in line with similar investments. In some instances, it may be better to replace a poor performer with a more promising prospect.
  If you are in a managed account (or TIMS) your financial advisor will rebalance your account on a regular basis. We usually do this twice a year, although that could vary if circumstances dictate otherwise. It is important to inform us of any changes in your circumstances or comfort level, so we can adjust your allocation when necessary. Regular review meetings are a good way to accomplish this.
  If you are not in a managed account, it is even more important to meet with your financial advisor regularly. We cannot make changes in your account without discussing them with you. The advisor will help determine if changes in your circumstances indicate you should be in a different risk tolerance model. The advisor will also recommend changes to bring your portfolio in alignment with your original allocation when needed.
  The purpose of rebalancing is to maintain proper asset allocation and diversity for your risk tolerance. Studies have also shown that regular rebalancing improves overall performance.

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