Asset Rebalancing - How it May Help
After you enroll in MSRP and choose your fund mix, you might be tempted to put account management out of your mind for a year or more.
But what happens if your mix of investments gets out of whack? You could end up taking on more market risk than you had intended, or not investing as aggressively as you intended. That’s why you may want to consider using asset rebalancing.
What is asset rebalancing?
Let’s say you start with and want to maintain an investment mix of 60% stock funds, 30% bond funds, and 10% short-term investments. Over time, market conditions may favor one type of investment over some others.
After a time, you may find that your mix looks more like 50% stock fund, 40% bond funds, and 10% short-term investments. An asset rebalancing strategy is a commitment to periodically buy and sell funds in your account to bring it back to your preferred mix of 60% stock funds, 30% bond funds, and 10% short-term investments. Making regular adjustments to counteract the effects of these performance differences – by selling some of your portfolio’s investments that have performed the best and investing more in areas that have fallen behind – can help keep your investment strategy on target.
Essentially, rebalancing will help you stick to your investing plan regardless of what the market does.1 As with any investing strategy, rebalancing and diversification cannot prevent you from losing money. However, these strategies may help reduce the effects of market volatility and potentially limit losses.
Learn more about rebalancing and other investment strategies for managing risk.
Can I have my account rebalanced automatically?
Yes! Your Team MSRP Retirement Specialist can explain your options, including how frequently your account is rebalanced and what portion of your assets is to be rebalanced. If you are ready to enroll your account in automatic rebalancing, sign on to your account and select “Manage My Funds” on the left hand side, then select “Manage Automatic Asset Rebalancing”; or you may call customer service to enroll in the rebalancing service.
Get the help you need
Talk with a Team MSRP Retirement Specialist to learn more about how to rebalance your MSRP account.
1Rebalance Your Portfolio to Stay on Track, Shauna Carther, May 18, 2009