Chuck Swindoll once said, “The longer I live the more I appreciate balance, and yet the more I see of extremes.” Most of us do appreciate balance. And most of us do see the extremes around us because they typically reveal something unexpected, or perhaps even dangerous. This naturally grabs our attention, at least for the moment.
As an investor, you have likely experienced times when the market seems to be overreacting to something. During these times it’s often best to step back and turn down the volume on the TV set. Remember, if you developed an investment strategy and the appropriate level of risk tolerance in your plan, then you’ve already prepared for extreme times. In other words, you have “balanced” your portfolio based on risk, goals and time horizon. This balancing act can help you get through these times with a degree of confidence that comes from being prepared.
And don’t forget, just like in life, we need to “rebalance” our investments from time to time. When your situation changes, or as you get older, you will likely change your goals and adjust your risk tolerance accordingly. Don’t fail to consider key changes in life and in turn adjust your investment portfolio. A periodic rebalancing can help smooth out the bumps in the road and help to keep you on track.