Is Your Investment Portfolio Due for a Tune-Up?

Even if you enjoyed significant growth in 2021, there may be good reasons to update your portfolio.

You know 2021 was a bullish year, so when you read the title of this article, you may have thought, “Why would I change a thing?” You may be enjoying unprecedented growth in your investment portfolio.  

For the most part, taking a long-term view, where you primarily buy and hold, can be a consistent investment philosophy. You don’t want to get tangled in a mess trading frequently or making changes to your mix of stocks and bonds every time a different report trickles in from Wall Street.

Even so, there are times when your investment portfolio needs a bit of tweaking, and here are a few reasons why it may be a good time:

Your Allocations May Be a Bit Off. This is due to the good returns you may have enjoyed on your stocks since approximately March 2020. By October of 2021, the S&P 500 had doubled, but the return on bonds was only about 4.2%. As a result, your allocations could be leaning heavier towards stocks than what you intended, and you may need to balance things out a bit. If a stock market downdraft occurs, you’ll be relieved you didn’t leave your portfolio exposed.

An Interest Rate Hike is Likely Coming: The Federal Reserve has indicated that these low interest rates won’t last forever, because they intend to reduce purchases of Treasury and mortgage-backed bonds. The benchmark short-term rate could be hiked as soon as the end of 2022, with multiple rate hikes likely in 2023.

Make Volatility Work For You: When the stock market became a bit volatile in the fall of 2021, dollar-cost averaging made it work well for some investors. This occurs because dollar-cost averaging reduces your average cost per share when cheaper shares allow you to buy more. It also helps because it removes the emotional aspect out of your investment decisions. Committing to a monthly installment into your investment portfolio could protect you from second-guessing decisions when the market is volatile.

When you need advice for making adjustments to your investment portfolio, contact us at Lawson Kroeker. We can help you rebalance, basing your portfolio on time-tested, long-term strategies that could help protect your plans from inflation, volatility and even the effect of emotional investing.

 

You are now being redirected away from the Lawson Kroeker’s site to the Fund's site. Click here to proceed.