Menashe Morley Group

Keeping Pace in a Transforming World

Posted on September 10, 2017

Investing would be so much easier if you could plan your financial future against a backdrop of stable markets and foreseeable global events. Yet the reality is far different. Investments that make perfect sense now might need rethinking later. With market growth a moving target, regular rebalancing can help you stay on track to meet your financial goals.

Without regular rebalancing, a balanced stock and bond portfolio could have become heavily weighted to stocks after the stock market surge of the 1990’s, leaving an investor dangerously overexposed during the bear market that began in March 2000.

Rebalancing involves paring back some of those assets that have become a larger portion of your portfolio, and considering investing in others that have dropped. Neither diversification nor rebalancing will ensure a profit or protect against loss in declining markets.

In volatile markets, it is critical to review and adjust portfolio positions at least once a year and sometimes more often. Yet investors often are reluctant, because it can be painful to sell investments that have done well. And the flip side of rebalancing—using proceeds from selling those winners to invest in securities whose performance has lagged—may also seem counterintuitive.

Revisiting your portfolio also allows you to consider whether changes in your life or your priorities may warrant increasing or decreasing your commitment to stocks, bonds and other assets.

For all of its benefits, rebalancing does carry some costs and risks, including transaction fees and capital gains taxes you may incur for selling assets at a profit. Moreover, markets are inherently unpredictable, and there is no guarantee that rebalancing will have the intended effect of helping reduce portfolio volatility and keeping your investment plan on course. But, that is all the more reason for a careful, disciplined approach to rebalancing, always with an eye toward your long-term goals. 

For more information, contact The Menashe Morley Group in the Rancho Santa Fe office 858-381-8113. The Menashe Morley Group, serving the community for over 32 years: David Menashe is a Senior Vice President and Wealth Management Advisor, Bruce Morley CRPC ® is a First Vice President and Wealth Management Advisor and John Naviaux CPWA ® is a Vice President and Wealth Management Advisor. Merrill Lynch makes available products and services offered by Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S) and other subsidiaries of Bank of America Corporation. Investment products: Are Not FDIC Insured, Are Not Bank Guaranteed, and May Lose Value. MLPF&S is a registered broker-dealer, Member SIPC and a wholly owned subsidiary of Bank of America Corporation. © 2016 Bank of America Corporation. All rights reserved. AR7HFGXQ

Neither Merrill Lynch nor any of its affiliates or financial advisors provide legal, tax nor accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation offer or solicitation for the purchase or sale of any security, financial instrument or strategy. Before acting on any information in this material, you should consider whether it is suitable for your particular circumstances, and, if necessary, seek professional advice. Any opinions expressed herein are given in good faith, are subject to change without notice and are only correct as of the stated date of their issue.

Past performance is no guarantee of future results. Investing in fixed-income securities/bonds may involve certain risks, including the credit quality of individual issuers, possible prepayments, market or economic development and yields and share price fluctuations due to changes in interest rates. Moreover, when interest rates go up, bond prices, typically drop, and vice versa.

Menashe Morley Group

Menashe Morley Group

Photo Caption: Menashe Morley Group

Photo Credit: Photo by Zach Tanz