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The Importance of Rebalancing Your Financial Portfolio

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Information about The Importance of Rebalancing Your Financial Portfolio
Finance

Published on March 13, 2014

Author: sheppr1

Source: slideshare.net

Description

Sticking to your long-term asset mix is the best way to meet your investment goals. Over time and depending on market action a balanced portfolio can drift away from the intended asset mix by a significant amount.

Stock markets are not static and move both up and down. As a result, your asset mix — that is — the basket of different types of investments that make up your portfolio, may have shifted. Over time, your portfolio may have become weighted towards fixed income and away from equities, or conversely, overweighted in equities and underweighted in fixed income. It’s important to regularly rebalance your portfolio.
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Sticking to your long-term asset mix is the best way to meet your investment goals target balanced portfolio (example of a moderate investment portfolio) bull market bear market 100% 80% 60% 40% 20% 0% fixed incomeequity Portfolioassetmix Portfolio becomes too conservative and may detract from future performance 5 Over time and depending on market action, a balanced portfolio can drift away from the intended asset mix by a significant amount. Insurance products and services distributed through I.G. Insurance Services Inc. Insurance license sponsored by The Great-West Life Assurance Company. Written and published by Investors Group as a general source of information only. Not intended as a solicitation to buy or sell specific investments, or to provide tax, legal or investment advice. Seek advice on your specific circumstances from an Investors Group Consultant. Trademarks, including Investors Group, are owned by IGM Financial Inc. and licensed to its subsidiary corpora- tions. © Investors Group Inc. 2014 MP1058 (01/2014) The importance of rebalancing Stock markets are not static and move both up and down. As a result, your asset mix — that is — the basket of different types of investments that make up your portfolio, may have shifted. Over time, your portfolio may have become weighted towards fixed income and away from equities, or conversely, overweighted in equities and underweighted in fixed income. It’s important to regularly rebalance your portfolio. Fixed income = Scotia Capital Bond Universe (100%); Equity = S&P/TSX Composite & MSCI World (50%/50%). Portfolio becomes too risky 5 RICHARD SHEPPARD CFP Senior Financial Consultant Investors Group Financial Services Inc. Tel: (403) 226-5531 Richard.Sheppard@investorsgroup.com

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