Press Releases
A Balancing Act for Your Investments
Stoker Ostler Wealth Advisors Offers 5 Tips on Rebalancing Your Portfolio in Uncertain Times
PHOENIX, Ariz. (September 27, 2007)…All around you are things that need to be balanced – the tires on your car, a load of towels in the washing machine, your checkbook. Taking a few minutes periodically to make sure they are balanced is important.
If you don’t, you will soon become aware of the consequences. Your car will start to shimmy and shake, washing machines have been known to “walk” away, and you might start getting expensive overdraft notices. It is no different with your investments – allowing them to get out of balance will have an effect. And generally, it is not one that you will be happy about.
According to Mike Bolar, partner and senior portfolio manager at Stoker Ostler Wealth Advisors, the best way to stay on track with your investments – especially in volatile markets – is to rebalance regularly. “Rebalancing is a discipline. It keeps you on track and helps to overrule your emotions when it comes to investment decisions.”
Rebalancing is a simple concept. Create a plan for how you want to invest your money – percentages of stocks, bonds, cash and different types of stocks, i.e. International vs. domestic, small vs. large, value and real-estate. Each of these should be assigned a weight and rebalanced regularly. Make sure you’re comfortable with how much risk there is. Then, keep an eye on it and make sure that as the market fluctuates, your percentages stay consistent.
“It’s particularly important in times like this when the markets are uncertain. It’s tough, emotionally, not to panic, or at least get concerned,” says Bolar. “That’s why a solid plan, well-executed is so important in getting you through rough spots.”
That means “buy low, sell high.” If you decided to have 50% in stocks and they have grown to 60%, then sell off some and invest in bonds, for example. It may sound simple, but think back to the boom in tech stocks a few years ago. People wanted to hold on to stocks that were skyrocketing, not sell them off. But if you had stuck to the discipline of rebalancing you would have been partially protected when they took a nose dive.
As the bulge of Baby Boomers gets closer to retirement, it becomes more important to pay attention to how your money is invested. According to the Investment Company Institute ICI), U.S. retirement assets topped $16 trillion in 2006, up from $5.9 trillion only a dozen years ago. When you look at retirement assets as a percentage of household assets, it is up from 22% in 1990 to 47% in 2006. In addition, investment in mutual funds has more than doubled since 1990, from 22% to 47%.
“It’s more important than ever to know where your money is, who is handling it, and make sure you are familiar with how it is being managed,” comments Bolar. He offers five tips for rebalancing:
- Know what you have – it may sound obvious, but many people simply check a box and walk away. Find out what kind of fund you have. Is it being rebalanced regularly? If you own an asset-allocation fund or lifestyle fund it will rebalance regularly. If not, see if there is an opportunity to move your money into a position where it can be rebalanced – not just left to flounder.
- Choose wisely – investigate to make sure you are getting the best investment advice. If an investment firm gets a commission for selling certain funds, it might not be for you. Make sure that anything in your portfolio that is bought or sold is for your advantage, not the broker’s.
- Rebalance regularly – choose a calendar day to rebalance, if you are handling your own investments. It is no different than changing furnace filters or the oil in your car or the batteries in your smoke detectors.
- Don’t rebalance too often – there is such a thing as too much of a good thing. Rebalance at least once a year, but no more than quarterly.
- Let go – if you are well-balanced, let go and your portfolio will work for you.
About Stoker Ostler Wealth Advisors
Founded in 1997, Stoker Ostler Wealth Advisors, formerly Private Wealth Management, is a fee-only wealth management firm that specializes in managing investments and providing financial planning for private individuals and families, small-to-medium-sized institutions and nonprofit organizations with investment assets greater than $500,000. In addition, the firm provides reporting, periodic rebalancing and active tax management services for its clients.
As of September 2007, Stoker Ostler manages over $783,000,000 in total assets. Additional areas of expertise include: retirement planning, 401(k)/IRA distribution and issues related to the death of a spouse, divorce, inheritance and stock options.
The firm’s founders, Philip Stoker and Creg Ostler, have more than 50 years of combined experience in wealth management. Stoker Ostler is employee-owned, allowing the company to steer clear of conflicts of interest that can arise when wealth managers are aligned with a product-based financial service company. Stoker Ostler’s independence, combined with the long-standing relationships cultivated with other financial professionals, allows the firm to provide successful, unbiased financial guidance, based solely on the needs and expectations of each client.
Stoker Ostler is headquartered in Scottsdale, Ariz. with an additional office in Utah. For more information, call (480) 890-8088 or visit www.StokerOstler.com.