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Ep 38: Why and When to Rebalance Your Portfolio Thumbnail

Ep 38: Why and When to Rebalance Your Portfolio


On This Episode

We talk about financial planning all the time, but plans aren’t concrete. You need to have some flexibility as the years pass. Today, we’ll share how to rebalance your portfolio and why it’s important.  



On today’s Saving With Silverman podcast, Mark Silverman CFP® explains why and when you should rebalance your portfolio. 

A balanced investor is typically 60% stocks and 40% bonds. After a year’s time, one will do better than the other. Stocks typically do better than bonds, but not always. 

Let’s say after a year you have 70% in stocks and 30% in bonds. You may need to sell the 10% that’s grown in the stocks and move that over to bonds to keep the 60/40. It can get a lot more technical, but that’s the gist of it. 

At a minimum, you should rebalance once a year. We do it for our clients when it needs to be done. If you’re doing it yourself, you could look at it every quarter or twice a year. 

We see rebalancing issues all the time, typically with people who have been handling their 401ks themselves for years. We don’t try to point blame, but we’ll ask how they chose the allocation. Often they got advice from someone at work and they haven’t changed it since, and they would have earned more money if they had been more proactive.  

There aren’t necessarily any investment vehicles that balance automatically. Once you get $10,000 in your account, you’re better off building your own portfolio with funds. You do pay extra to have the convenience of having one fund, and you don’t have a lot of customization. 

Listen to the entire episode to hear more. Click on the timestamps below to skip to a particular segment. 

The closer you’re getting to retirement, the more you need to be in tune. If you’re five or 10 years from retirement, it’s a bigger deal. 

 - Mark Silverman, CFP®

The Layout

Let’s get rolling with the first episode and you can use the timestamps below to skip around to specific topics.

0:47 – Rebalancing

2:04 – How often to rebalance

2:49 – Younger versus older

3:30 – Investment vehicles

4:28 – How long Mark has been doing this work

5:33 – Personal story

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