Allocate & Diversify

Rebalancing
  Back to Allocate & Diversify

The moment you invest in the market, the underlying assets in which you are invested will begin to fluctuate in value, for better or worse. Though you might initially begin with a conservative allocation model that consists of 40% stocks, 40% bonds and 20% cash, the stock market may experience a downturn, decreasing the relative value of the stock portion in your portfolio. For example, say your stocks are decrease in value to the point where the money you have invested in stocks drops to only 20% of your portfolio. With only 20% of your total holdings invested in stock, your portfolio would be much more conservative than you initially intended because stocks are generally riskier than bonds and cash investments.

You can rebalance your portfolio in a variety of ways, returning it to the allocation you're comfortable with. One option is to sell a portion of the asset class that is performing relatively better and investing the proceeds in the lagging class. Or, you can invest additional cash or purchase new investments in the asset class that has lost value. Investment professionals typically advise rebalancing once a year.

Print
 
Featured
Interactive Learning
Live Events
Upcoming User Summits
Research the Market with ScottradeELITE 1/4/11
Option Basics 1/4/11
Introduction to Technical Analysis 1/4/11
Look for Scottrade Events Near You
 

With more than 500 branch offices nationwide, Scottrade offers live events in neighborhoods all over the country. Visit your local Scottrade office for a cozy small-group Branch Seminar, or get together with Scottrade customers from your area at our popular User Summits.

Browse All Live Events >
Live Webinars

Stream live, interactive presentations right to your computer! Check back every week for new Live Webinars on a variety of topics including:

  • Market analysis
  • Basic & advanced orders
  • Research tools
Browse All Live Webinars >

Education meets interaction in the Scottrade Community. Join Scottrade customers from all over the country as you exchange information, ideas and trading strategies in a comfortable online learning environment.

Interact with Scottrade customers and product specialists. Share your thoughts and learn from others. Grow as an investor. Join our community today!

Learn More About the Community >
© 2011 Scottrade

Brokerage Products and Services offered by Scottrade, Inc. - Member FINRA and SIPC

Online market and limit stock trades are just $7 for stocks priced $1 and above.

Any specific securities, or types of securities, used as examples are for demonstration purposes only. No information on this Web site should be considered a recommendation or None of the information provided should be considered a recommendation or solicitation to invest in, or liquidate, a particular security or type of security.

Investors should consider the investment objectives, risks, and charges and expenses of a mutual fund carefully before investing. A mutual fund's prospectus contains this and other information about the mutual fund. Prospectuses are available through our trading site or through a Scottrade branch office. The prospectus should be read carefully before investing. No transaction fee (NTF) funds are subject to the terms and conditions of the NTF funds program. Scottrade is compensated by the funds participating in the NTF program through recordkeeping, shareholder, or SEC 12b-1 fees.

Investors should consider the investment objectives, charges, expense, and unique risk profile of an Exchange Traded Fund (ETF) carefully before investing. Leveraged and Inverse ETFs may not be suitable for long-term investors and may increase exposure to volatility through the use of leverage, short sales of securities, derivatives and other complex investment strategies. A prospectus contains this and other information about the ETF and should be obtained from the issuer. The prospectus should be read carefully before investing.

Margin trading involves interest charges and risks, including the potential to lose more than deposited, or the need to deposit additional collateral in a falling market. Margin Disclosure Statement (PDF) is available for download, or it is available at one of our branch offices. It contains information on our lending policies, interest charges, and the risks associated with margin accounts.

Options involve risk and are not suitable for all investors. Detailed information on our policies and the risks associated with options can be found in the Scottrade Options Application and Agreement, Brokerage Account Agreement, and by downloading the Characteristics and Risks of Standardized Options and Supplements (PDF) from The Options Clearing Corporation, or by requesting a copy from your local branch office. Supporting documentation for any claims will be supplied upon request.

Market volatility, volume, and system availability may impact account access and trade execution.

Testimonials may not be representative of the experience of other clients and are no guarantee of future performance or success.