New Year Means It’s Time to Rebalance Your Portfolio

If you are like many investors, your portfolio is on cruise control. Consider this: when is the last time you checked your allocation levels between say stocks, bonds, and precious metals?

The stock market posted healthy gains in 2024. But, it’s important to remember those numbers you see on your stock market brokerage account are just “paper gains.” It’s not an actual profit until you exit the investment and lock in the gains.

That’s right. Until you actually hit the button to sell out a portion of your stock position in a “rebalancing” effort, those stock gains are just a paper profit that could disappear fast in the next market swoon or bear market.

Now is a great time to lock in some of those stock market paper profits through rebalancing.

What is rebalancing?

Rebalancing simply means selling assets that have pushed outside of your allocation level. For example, if you planned to allocate 70% of your portfolio to stocks, that amount could stand at 75% now. That means you may be taking on more risk that you intended to.

As John Bogle once said: “If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.”

You will need to rebalance back to your baseline allocation target. It is as simple as selling five percent of your stock allocation and using those funds to add a five percent allocation to precious metals.

While you may still want to have exposure to stocks, adding or increasing your allocation to physical gold can benefit your portfolio over the long-term. You can download an independent research report detailing long-term performance of gold and rare coins here. The results may surprise you.

Rebalancing helps you keep your portfolio on track for your goals and objectives. Rebalancing brings your portfolio back into alignment so you can sleep easy at night.

Why precious metals?

Gold acts as an insurance policy, a hedge against equity market declines and a vehicle to protect and grow wealth. Blanchard recommends that its clients allocate 10-15 percent of their investment portfolios to gold. However, it’s notable that recent research has shown that portfolios with a 30% allocation to physical gold have shown better overall long-term performance. When the equities markets falter, gold performs strongly which is why diversification is important in the first place.

We can help

It may seem like a chore, but taking a few hours to shore up your portfolio may be one of the most important things you do in the New Year. If you want advice or help in the process, one of the Blanchard portfolio managers will be happy to answer your questions and help you devise a strategy appropriate for your personal financial situation and goals. Give us a call today!

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