logo for bates insurance group, an independent insurance agency in eden prairie minnesota

For All Your Insurance Needs...Think BIG!


Toll Free: 800-728-8745

It's been another unbelievable year in the financial world.  2009  saw the S&P 500 plunge to 670 in March, and then rise over 60% from that low as the global economy moved away from the edge of the cliff and started to recover.   We moved away from words like meltdown, apathy, and despair, to "green shoots",  hope, and  most recently hints (just maybe) of optimism!

Last year I attempted to add perspective to feeling overly negative about ones portfolios or investments - suggesting that negative feelings may motivate bad decision making consequently ignoring our long term objectives.  I reminded us of the tried-and-true lesson of "staying the course".  Those that stuck to these convictions - may have indeed been rewarded.

Yet, part B of this reminder  is that Staying the Course does not mean doing nothing.  To stay the course - we must regularly check-in on things like our risk tolerance, and understanding what "long term" really means.   It means re-connecting with your original objectives, measuring where you  are today,  and making needed adjustments.   Maybe you  need to save more than before  in order to recover more predictably, and assume lower rates of return in your savings plans.  Maybe paying down your debt is a higher priority than before, and lowering your savings is a short-term compromise.

Regardless of your cash flow adjustments, regularly re-balancing your investments is a crucial ingredient of a "staying-the-course strategy" too.  Regardless of a good or bad year's performance,  regular / annual rebalancing is a necessary step in order to yield the benefits of diversification, yet many of us fail to do so.
Think of it this way, imagine you are sailing across the ocean, and you set the auto-pilot for your destination.  Would you wake up each morning, and not even bother checking to see where you are?  Will you not make adjustments if a storm is approaching or when the wind is at your back?  I would bet not.

Take charge or your retirement, and make an effort to annually re-visit  your investment strategy.  Small adjustments today, may avoid larger ones later -- across the ocean.

Investing involves risk including the potential loss of principal.  No investment strategy, including diversification or asset allocation, can guarantee a profit or protect against loss in periods of declining values.  Past performance is not a guarantee of future results.  Please note that rebalancing investments may cause investors to incur transaction costs, and when rebalancing a non-retirement account, taxable events will be created that may increase your tax liability.  Rebalancing a portfolio cannot assure a profit or protect against a loss in any given market environment.

Securities offered through Royal Alliance Associates Inc., member FINRA/SIPC. Investment advisory services offered through Focus Financial Network, Inc., a registered investment advisor not affiliated with Royal Alliance Associates, Inc.  /  1000 Shelard Parkway, Suite 300, Minneapolis, MN  55426

Contact BIG

Use this form to ask us a question. We will get back to you shortly.