You rebalance your tires. Why not your investments?

A few years ago there was a TV ad in which some friends head out for a road trip with a goal, but no destination. Their goal is to only make left turns. In a 30 second montage they left-turned to wacky and fascinating sites and finally end at ridge overlooking an amazingly beautiful sunset. I like to think that this was based on someone’s real-life adventure. That a few carefree friends serendipitously discovered the meaning and beauty of life. So taken with this idea, I decided to give it a mini-try using just one afternoon.

I left-turned out of my driveway and gleefully headed down the street and turned left.  After ten minutes I decided to cheat so that I could make a right turn and get out of my neighborhood. A half-hour and running into dead ends led me to cheat again. Then 30 minutes later I completely gave up. My experiment quickly took me nowhere. Planning, it turns out isn’t really a buzz kill at all. Wandering without a destination or map to get there is a huge waste.

It’s the same with your money. If you just keep doing the same thing all the time without looking for the best route to meet your destination, you’ll never get where you want to be.

You’ve probably heard that to maintain your investments you shouldn’t constantly change your financial strategy. While this is true, you can’t keep making left turns or holding on to the same 401(k) or stock mix when there isn’t any road ahead. Sometimes, you’ve got to rebalance your  investment mix and bring it back to the expected and appropriate risk level for you.

The chart below from Fidelity Investments illustrates the roller coaster effect of a buy and hold strategy versus rebalancing. Mostly what you’ll see here are the extreme high’s and low’s of the hold strategy in red. Both strategies end up at nearly the same place, but the buy & hold extremes also cause you great emotional stress. What if something else happens in your life and you need to use those investments during that time? The rebalancing approach helps maintain a steady flow.

To keep your investment strategies on track you need more than a road map. If you stick with the road trip analogy think about this… Which is easier: reading a map or following your GPS?  When using a map, if you run into detours you’ll need to pull over research alternate routes and lose precious time. The easier way is to just let the GPS figure it out. The financial consultants at Coors Credit Union are like your GPS. They focus their time on knowing the market. They’ve got all the information and they understand it. They can help you rebalance quickly so you don’t get caught in left turn dead ends. 

You can meet with financial consultants Thomas P. Valdez Jr. or Nelisha Firestone for a free, no-obligation portfolio review anytime. Just email or call (303) 279.6414 or (800) 770.6414 between 9:00AM and 5:00PM Monday through Friday.


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