Time and again, diversification serves its purpose.
In the last 15 years, the world endured multiple natural disasters, numerous geopolitical conflicts and the deepest economic recession in the post-WWII era. Through it all, a diversified portfolio of stocks, bonds and other uncorrelated asset classes proved itself a winner. 6.2% Annual return on a well-diversified portfolio over the last 15 years.
ASSET ALLOCATION and REBALANCING
Numerous studies show that Asset Allocation is by far the most important component of investment returns and risk. Rebalancing your portfolio allows you to maintain your desired level of risk, even after major market fluctuations.
From studies and our experience, we know that investors tend to want to do the “wrong” thing at the wrong time, based on movements in the markets. In times of intense volatility or declining markets, they often want to sell their portfolio to reduce risk – a decision that often leads them to end up paying a higher price later on when they want to buy back the portfolio.
Rebalancing encourages you to put money into stocks when they’re cheap and to sell when they’re expensive.
To Learn more contact us at www.undividedwealth.com
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments concerning the past performance are not intended to be forward looking and should not be viewed as an indication of future results.