INVESTMENT

Rehabilitation | Vanguard


In an instant

  • Check your portfolio at least once a year. If your current asset mix is ​​5 percentage points or more above your goal, keep the balance.
  • Rehabilitation ensures that your portfolio will put you at the right amount of risk so that you can meet your long-term goals.
  • If you want to avoid the hassle of re-balancing, consider an all-in-one fund that does it for you.

Vision is an important aspect of Vanguard’s policy for investing in success in maintaining vision and long-term discipline. It’s easy to “set it up and forget it” by relying on your commitment to a long-term investment plan. However, it is worth taking the time and time again to check your progress.

After you open an account and choose your investments, keep an eye on your portfolio. About once a year, compare your current asset mix with your goals. If it changes by 5 percentage points or more, the balance to get back on track.

Read tips to rearrange your portfolio.


Your goal is a mix of resources versus your current mix

The goal is a mix of resources

Your investment goals, timelines and risk tolerance determine your target asset mix, which is the ideal mix of stocks, bonds and cash in your portfolio. Once you determine your target asset mix, you can open an account and choose to invest.

Your target asset mix is ​​what’s happening in your investment life – everything You What he wants to do and what he does You Feeling comfortable with market movements and the current economic situation No. Your goal affects the asset mix.

Most investor goal asset combinations are generally consistent, but if you experience significant changes in lifestyle – such as having children, changing jobs or retiring, it is important to re-evaluate your goals.

A mix of current resources

Your current asset mix is ​​the actual mix of stocks, bonds and other investments that you keep in your portfolio at any given time. In contrast to your target asset mix, market movements and current economic conditions can affect your current asset mix. While this may initially look similar to your target asset mix, your current asset mix may deviate from your target over time as the value of stocks and bonds fluctuates.

In case of rearrangement

When one asset class – stock, for example another – is performing better than the other, your portfolio may be “overweight” in that asset class. Say your target asset mix is ​​50/50 share between stocks and bonds. You basically invest 3,000 in a stock fund, which buys 20 shares. You invest another $ 3,000 in a bond fund, which also buys 20 shares. Your 6 6,000 portfolio balance is evenly divided between stocks and bonds, matching your goals.

Fast-forward several months where stocks have consistently outperformed bonds. For simplicity, suppose you don’t reinvest your dividends or capital gains or make any additional contributions, so you still own 20 shares of each fund. As a result of market fluctuations alone, shares of your 20 stock funds are now valued at $ 5,000, and shares of your 20 bond funds are valued at $ 2,000. Your Total Portfolio Balance – $ 7,000 now Divided into about 70/30 between stocks and bonds, which makes your portfolio extra weight on stocks.

This scenario could be profitable right now সর্ব after all, more money has been invested in your high-performing asset class. So what is the danger? Whatever goes To be able to Coming Down If you invest more in stocks and lose parity with your target asset mix and they fall in price, you have more to lose than you expected.

How to maintain balance

If your current assets fall by 5 percentage points or more from your goal, you may expose yourself to a level of risk (too high or too low) that is inconsistent with your long-term goals. Balancing your portfolio rebuilds your existing asset mix with your target mix.

Before deciding how to balance, think about time. Do you want to return to your target asset mix immediately or are you increasingly comfortable doing it?

Get back to your target as soon as possible

In the example above, you have a lot of stock and not enough in bonds. To correct the balance, you can transfer more money to the bond by purchasing your bond fund from a linked bank account (or by check). You can exchange money from your stock fund to your bond fund. Both of these options can instantly rearrange your current asset mix with your goals.

Get back to your goal over time

Using the same example, you can restore balance in your portfolio by indicating the distribution of dividends (dividends and capital gains) from your stock fund to your bond fund. Since you cannot predict the exact amount of funds to be disbursed in the future, this option may require patience and regular monitoring.

If you invest in a taxable (i.e., non-retirement) account and sell the investments that have earned value, you will probably have to pay taxes. To avoid this situation, you can create a target asset mix that includes all the accounts in your portfolio. You can then compare your overall asset mix with your goals rather than viewing each account individually. If you only balance between tax-exempt (i.e. retirement) accounts, you will not be able to pay taxes if you sell an investment that has increased in value. Note: We recommend that you consult a tax or financial advisor about your personal situation.


No interest in rearrangement? No problem.

If you don’t want to worry about rebalancing your portfolio, you can invest in a single all-in-one mutual fund that automatically balances its holdings. This type of fund invests in thousands of individual stocks and bonds so that you can get a diversified portfolio by owning a single investment.

If you save for retirement, consider a vanguard target retirement fund. Each fund is designed to manage risk while trying to increase your leisure savings. Fund managers gradually shift the asset allocation of each fund to less stock and more bonds so that the fund becomes more conservative near retirement. Managers maintain the current target mix, which saves you the hassle of running rearrangements.

If you are saving for a purpose other than retirement, we offer 4 Vanguard Life Strategy: funds. Each fund is designed for a common target asset mix so you can easily manage risk while trying to maximize your savings. Funds are managed professionally to maintain their specific asset allocation, which means you don’t have to remember rehabilitation.

Hello, long term investor!

Welcome to the Vanguard community of long-term investors. Keep up the good work! And remember, you don’t have to do it yourself. We got your back. We provide online tools and resources to help you monitor your performance and assortment of resources, as well as advice services if you’re looking for more comprehensive help.


More info:
Online calculators and tools
Vanguard Personal Advisory Services:


Comments:

All investments are at risk, including the potential loss of money you invest.

Diversity does not guarantee gain or protect from loss.

Be aware that financial market fluctuations and other factors can reduce the value of your account. There is no guarantee that any specific asset allocation or combination of funds will meet your investment objectives or give you a certain income level.

Investing in target-debt funds is subject to the risk of their underlying funds. The year in the name of the fund refers to the approximate year (target date) when an investor in the fund retires and leaves the workforce. The fund will gradually shift its target from more aggressive investments to more conservative ones based on its target date. Investing in a target-debt fund is not guaranteed at any time, on or after the target date.

Each Life Strategy Fund invests in 4 widely diversified vanguard funds and is subject to the risks associated with those underlying funds.

Counseling services are provided by Vanguard Advisors, Inc., a registered investment advisor, or Vanguard National Trust Company, a federally chartered, limited purpose trust company.

The services provided by clients selected for ongoing consultation will vary depending on the amount of resources in the portfolio. Review the Vanguard Personal Advisor Service Brochure (Form CRS) for important information about the service, including its asset-based service level and fee breakpoint.





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