Retirement Mistake No.6: No Rebalancing System for Your Portfolio
Posted In: Retirement Planning for Entrepreneurs

Rebalancing Tires and Money

In Canada, we all know the importance of maintaining our vehicles for winter. Living in Vancouver changes the need for snow tires, but we still need to regularly rotate our tires for maintenance and efficiency. How about your portfolio? How is it rebalanced?

Avoid the pitfalls faced by investors–market volatility, currency risks, rising interest rates, and missed opportunities. Rebalancing on a regular basis can help you stay on track and on the road when things get rough. There are six ways to establish a rebalancing program with your finances. These types of rebalancing can help preserve your capital. The types of rebalancing, or what I refer to as elements of diversification, are:

  1. Periodic (monthly, quarterly, or annual) adjustment of your portfolio mix. 2.
  2. Threshold, as in percentage-based, such as 5% to 8% off target.
  3. Range-based, which adjusts your investments back to certain limits rather than a fixed asset allocation.
  4. Volatility-based, which takes into account the expected range of ups and downs due to markets and types of holdings (high- or low-risk).
  5. Active, which is determined based on markets and results.

Most pension plans in Canada utilize rebalancing strategies to preserve the capital for retirees and maintain payouts based on market conditions. Rebalancing your money can keep you safely on the road to financial success.  Have you checked out our other articles on retirement mistakes? Click here!

Happiness does not depend on outward things, but on the way we see them. – Leo Tolstoy

The art of living lies less in eliminating our troubles than in growing with them. – Bernard M. Baruch


Published with permission from Grant Hicks



The information provided on this site/blog page is solely for general and educational purposes and is based on the perspectives and opinions of the owners and writers. It is provided with the understanding that it may not be relied upon as, nor considered to be, the rendering of tax, legal, accounting, or professional advice. Please consult an appropriate professional regarding your particular circumstances. This site/blog page may also contain links to other sites which are not maintained or controlled by us. Access to or use of sites to which links are provided are subject to the terms and conditions of such sites. References to third party goods or services should not be regarded as an endorsement of those goods or services. All information provided is believed to be accurate and reliable, however, we cannot guarantee its accuracy. It may also include forward looking statements concerning anticipated results, circumstances, and expectations regarding future events. Forward-looking statements require assumptions to be made and are, therefore, subject to inherent risks and uncertainties. There is significant risk that predictions and other forward looking statements will not prove to be accurate. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus and/or the fund facts before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

Let's Chat