John Bubello, CFP® CRPS® and fiduciary to the SAFT 401(k) Plan talks about why rebalancing is important in 2020.

Today I want to talk about rebalancing and why it is critical to rebalance in 2020. Bad news is that COVID-19 is still here, but good news is that vaccines are on the way. Sure, there is uncertainty around the rollout but I have confidence in our pharmaceutical industry.

Rebalancing your investments is especially important when we have big winners and big losers. We can see this in the 401(K) in 2020:

High quality bonds have done quite well, high yielding bonds have not.  Some stock investments have done extremely well, others have lagged significantly.

Let us look at what’s done well in 2020, and what’s done poorly in the US stock markets.

So, with some areas of the US stock market having already done extremely well, we should trim what’s expensive.  And some investments have trailed, so we can buy more of what’s “on sale”.

Rebalancing also ensures we stay closer to our target portfolio.  We do not want certain investments to play too big of a role or dominate our portfolio (unless that’s your intention).

In the SAFT 401(k), if you are in GoalMaker, you will be rebalanced automatically on a quarterly basis => if you haven’t turned it off. If you’re NOT in GoalMaker, or have rebalancing turned off, you should consider your rebalancing strategy now.

If you have a rebalancing question, please reach out at any time.

 Click here to Schedule Time with John