stock and bond rebalancing

With a rapidly changing market comes the need to rebalance your portfolio to ensure you maintain your desired asset allocation. Volatile markets and global economic crises don’t happen every day, but they have certainly impacted investors’ portfolio balance in recent weeks. Regardless, it’s often best for the long-term growth of your portfolio if you commit to regular rebalancing.

Rebalancing Matters
It’s an essential step to ensure your asset allocations are in line with both your risk tolerance and your individual goals.

During a bull market like we have seen prior to 2022, your stock investments produced substantial yields, growing the stock side of your portfolio. At the same time, if you have allocated some of your investments to the bond side of the equation, that portion of your portfolio became, percentage-wise, much lower.

During a bear market, like we are currently experiencing, you have seen the value of your stocks fall, lowering the percentage of your overall portfolio that they make up. This is normal market behavior and you don’t need to react to market volatility – staying the course is recommended. Additionally, it’s never advised to sell at market lows.

However, revisiting your allocations at some point – whether annually, semi-annually, or quarterly – will help you stay on target to meet your investment goals, regardless of how stocks and bonds are performing.

If you are concerned about the time involved in regular portfolio rebalancing, the team at Direct Advisors is happy to discuss setting up automatic quarterly rebalancing. This way, you have one less thing to worry about, but you will be better prepared for volatile markets over time. Contact us at (518) 362-2119 during regular business hours.