How To Balance Your Portfolio

As you near the age where everything else seems to be picking up speed while you seem to slow down, in simpler words, as you reach your retirement age, you will need to have an investment portfolio that is secure, stable, and largely liquid. This is why balancing and rebalancing your portfolio from time to time is important. All of these will lead to your retirement where you will want the most stable financial prospects available. Here are some tips on how to balance your portfolio.

  • Know the importance of balancing your portfolio. Balancing your investment portfolio from time to time is very important since a lot of factors in your life changes as the years go by. For instance, as you grow older, your priorities and attitudes change. Back in your late 20’s, you were probably inclined to invest in high risk, high yield stocks and short term property flipping. This is probably because your focus was on earning money fast and in huge amounts. As you reach your 30’s your priorities change since you are probably taking more cautions with the investments you make and looking at more long term options. As you reach your 40’s, your priorities once again change where you are looking for liquidity and the maturation of some of your stocks and physical assets. Once you are within arm’s reach of your retirement age, converting most of your assets into more liquid forms will probably be your primary priority. All these being said, it is quite critical for any person to rebalance their investment portfolio every so often to incorporate certain changes brought about by age.
  • Examine your existing assets. Every time you try to balance your portfolio, you will need to examine and evaluate your existing assets. This will include all the stocks, properties, and liquid cash you have interests in. This will help you determine your net worth and see where most of your resources are invested. As you grow old, you will want to divert some of your stocks and properties into something more liquid. You will want to cut and convert some of your risky investments into more stable and long term assets.
  • Consult a financial manager or advisor. Once you determine and evaluate all the existing investments and assets that you have accrued, present these to a financial manager and discuss what you want to change, alter, or liquidate. This professional can help you balance your portfolio based on your priorities. Should you want to convert some assets into something that will produce you long term wealth, then communicate this with this expert. Rebalancing your portfolio should be done with a professional since it is truly a difficult task to accomplish.

Your new portfolio should aim to provide you with a stable cash flow as you enter your retirement age. This is the universal goal of most people, which is why rebalancing your investment portfolio every 5 or 10 years should be done in order to effect the changes you want.


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