Investing Basics flipbook_2024

Getting Back on Track Rebalancing is a process that returns a portfolio to its original risk profile. It typically requires buying or selling assets periodically to maintain the desired allocation. You should keep in mind that selling investments could result in a tax liability. Asset balances tend to shift over time, especially during periods of market volatility. A shift toward stocks may lead to an overexposure to risk, or a shift toward bonds might make your portfolio too conservative to accomplish your long-term goals. Changes in your life could also trigger a need to rebalance. For example, many people choose a more conservative portfolio balance as they approach retirement. Remember, asset allocation does not guarantee a profit or protect against investment loss; it is a method to help manage investment risk. The return and principal value of stocks and bonds fluctuate with changes in market conditions. Securities, when sold, may be worth more or less than their original cost. Investments seeking to achieve higher yields also involve a higher degree of risk.