At Paracca Wealth Advisors, we take a proactive approach to investing. We know that investing is not a set and forget process. Portfolios need attention in order to maximize return and stay in line with a client's specific risk tolerance. Our clients go to sleep at night knowing that their accounts are constantly monitored by our team, not sitting on the back burner.
In order to keep your portfolio in line with your financial goals and risk tolerance, portfolio rebalancing is a necessity. Imagine you have a plate of food with different items on it: vegetables, meat, and carbs. Now, let's say you want to make sure you're getting a balanced meal, so you want to adjust the amounts of each item to keep it balanced.
Portfolio rebalancing is a bit like that. Instead of food, you have investments like stocks, bonds, real estate, commodities, and cash. Over time, the value of these investments might change, like one type of stock doing really well while another doesn't do as well.
Rebalancing is the process of adjusting your investments back to your original desired mix. For example, if your stocks have appreciated faster than your other assets and now make up a bigger portion of your portfolio than you originally wanted, you might sell some of those stocks and buy more of the other investments to get back to your desired balance. It's like rearranging your plate to make sure you're getting the right mix of nutrients, but in this case, it's to make sure your investments are aligned with your financial goals and risk tolerance.
At Paracca Wealth Advisors, we rebalance our client's portfolios quarterly at minimum. The frequency of our rebalancing schedules will vary based upon the complexity and specific needs of the portfolio.
