The Basics of Investments

Rebalancing Your Investment Once a Year

Once you've decided on a mix of investment options that fits your investment objective, time horizon, and risk tolerance, your next question might be how to maintain it.

Many financial professionals recommend that you review your investments once a year to make sure that your asset allocation still makes sense in light of your aspirations and then current financial situation. We certainly would agree with this point of view, however we would expect at the outset of a Portfolio’s construction, that the initial choices would be geared… Especially a capital accumulation exercise…To achieve performance targets over three to five years. Once that initial platform has either been achieved in full or the majority of objectives have been met, then if any of the three factors mentioned above have then been affected, you may want to review and change your allocation. Once the initial objectives have been achieved , then a annual review is recommended.

Then, if one type of investment has outperformed the others in your portfolio, the percentage of assets in each of your investments may have changed. In that case, you may want to shift a portion of your money from certain investments into others, to restore your original asset allocation. Equally as one reaches the second half of the anticipated investment period, greater thought must be given towards more conservative vehicles and opportunities to lock in and protect accrued values.