We are pleased to say that we have had yet another positive year of returns so far in 2017. And while that is good news for most, it doesn’t mean we can just sit back – there is still work to do. Three key things come to mind that advisors and clients should be actively monitoring. As 2017 is the 9th year of this bull market, it could make these three things even more important – especially if you have not done them before.
1. Rebalance your portfolio
If you began in 2009 with a portfolio at 60 percent stocks and 40 percent bonds, you would now have more than 80 percent in stock without any rebalancing. My guess is that it is probably not your intention to have that much equity risk, which makes it imperative that you rebalance your portfolio. The gains that you have made will not last forever and making sure that your portfolio is at your intended risk tolerance should be at the top of your to do list.
2. Know that the same assets could stop outperforming
Different asset classes may not usually perform well at the same time. For example, during the last five years growth stocks have significantly outperformed value stocks while stocks here in the US have done much better than ones that domicile internationally over that same time period. Looking toward the future, consider having a conversation about buying the asset classes that have underperformed. It could lead to outperformance over the next five years.
3. Talk to your advisor about keeping gains
Making money in your investments is always fun to watch, but keeping those gains is the real goal – especially for those nearing retirement or already in retirement. There is a possibility that you can’t afford to give those gains back, as your income need is now attached to these new, higher values. Talk to your advisor about ways to make sure that your gains will remain. This is where our Cabana models can play a role. Our algorithm was designed to reduce the risk of loss due to market decline, while still obtaining a competitive return.
-Adam Smith, Financial Advisor
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