Money Matters: Time To Rebalance Your Money


Story by Raj Satsangi.

Cary, NC — If you’re like most people, you started-off the new year by taking an inventory of your lifestyle and resolving to make some changes. Maybe you pledged to eat less junk food or spend more quality time with your kids.

Take An Inventory

Now’s a good time to also take an inventory of your finances and resolve to make some changes, like rebalancing your portfolio, cutting your spending or increasing your 401(k) contribution.

Rebalance Your Portfolio

Your portfolio may have changed due to losses or gains in your investment options during the past year.

Rebalance your investments to make sure the original asset allocation of your retirement funds remains in place and you keep the level of risk you’re willing to take by periodic readjustment.

For example, let’s assume your original asset allocation was 30% domestic stocks, 30% international stocks, 20% money market, and 20% guaranteed interest. A year later, due to stock market activity, all but one of your investment choices make excellent gains which in turn changes the weighing of your portfolio. Now, your domestic stocks make up 33%, international stocks 35%, money market 22%, and guaranteed interest 10%.

You can rebalance your portfolio by taking some money out of the accounts that have gone over your desired allocation and transferring them to the accounts that have dipped under.

Cut Your Spending

It’s easy to overspend. Even small purchases can have an impact on your financial goals. Think about getting off the spending merry-go-round with some easy ways cut back.

Increase your 401(k) contribution

A small increase can grow over time. Just by increasing your 401(k) contributions by 1%, you can make a big difference to your retirement savings.

If you’re making $25,000 a year, 1% is about $20 per month or only $5 a week! Assuming 20 years to retirement and an 8% annual growth rate, your additional $20 per month would grow to $11,780! *

 *This illustration is for hypothetical purposes only and is not intended to represent the performance of any specific investment product.


Raj Satsangi, Financial Services Representative, Princor Registered Representative, Principal Financial Group. Send him your questions via email.

Money photo by Amarand Agasi. Scales photo by Chris Potter for Open University.