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Rebalancing Portfolios


Published: 04/10/2014

by Warren MacKenzie

Financial peace of mind exists when you feel no need to spend much time thinking about your investments, because you know you’re managing them wisely. It’s like when we are in good health and not thinking about the fact that we’re in good health. Good health is unnoticed. It’s only when we have an ache or a pain that health becomes an issue. The same goes for our money.


How do we get financial peace of mind? We get it by having certainty that we’re managing our money wisely. This doesn’t mean certainty that we’ve picked the right stock or the right mutual fund. It means:


1            having certainty that we are following a disciplined investment process


2            certainty that the investment portfolio is designed to achieve our goals


3            certainty that we are receiving performance information that will point out any necessary changes


4            having a well-diversified but simple-to-understand portfolio, and


5            knowing that we are paying reasonable fees and we are considering all risks.


Most wise investors locked in their profits by rebalancing their investment portfolio late in 2013 or early in 2014. If you did not rebalance at this time, it means:


a             you are not following a disciplined investment process, or


b            you’re not trying to have a well-diversified portfolio, or


c             the equity portion of your portfolio has underperformed compared to the stock market, or


d            your investment portfolio is too complicated to rebalance.


Why do most investors worry about their investments rather than enjoy financial peace of mind?


i              Instead of following a disciplined investment process, they focus on trying to find the best investment                    products – and this is a strategy that often backfires.


ii            They worry that they are not in theright balance and they should have more (or less) in equities.


iii           Their portfolio is not goal-based and designed to achieve their specific goals. It is instead designed to                    beat some benchmark – or even worse – it’s designed to maximize fees and commissions.


iv           They don’t receive the performance information necessary to show if they’re on track to achieve their                      goals and to verify that their managers are adding value.


v             They don’t know how much they’re paying in fees and they suspect there are hidden fees.


Why don’t investors take action? There are four possible reasons.


They think all advisors are the same and they don’t realize that some advisors do follow a disciplined investment process. They’ve not yet suffered enough pain to stimulate them to action. They don’t realize that underperformance of only 1% per annum can make the difference between financial security or living with the in-laws in one’s old age. They don’t realize how easy it is to make a wise change.


It’s easy to get on the right path. Over just a few hours, you can meet with a firm that avoids conflict of interest (widespread in the financial services industry), discuss your goals and tolerance for risk, review a written investment proposal and make a decision that gives you financial peace of mind. 


Warren MacKenzie, CA, CFP, CHFS, founder of Weigh House Investor Services in Toronto, can be reached at or at 416-640-0550.



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