What Is Smart Rebalancing?

Even if you know the value of rebalancing, it can be a tedious task. That’s why iInvest® utilizes Betterment technology, rebalancing automatically—so you don’t have to worry about it.

KEY TAKEAWAYS

  • Rebalancing prevents you from making the classic behavioral mistake of buying high and selling low.
  • At iInvest®, the technology that we use automatically rebalances your account so you never have to worry about doing it yourself.

Mobile Roth IRA Investment

What is rebalancing?

Mobile Investment RebalancingRebalancing is recognized as a smart practice in investing — and it is something that our investment advisors recommend to almost all of our clients. It realigns your portfolio back to its original asset allocation as it gets out of balance over time. A portfolio is rebalanced by selling “extra” stocks and buying more bonds to recreate your original stock/bond ratio. Smart Rebalancing automation also realigns the actual asset classes within each client’s stock and bond allocations (i.e., large cap value, small cap growth and international assets) as they become out of balance.

At iInvest®, utilizing Betterment technology, we rebalance your portfolio dynamically, efficiently, and automatically as you invest. Every time that you receive a dividend or deposit more money, we invest it into the part of the portfolio that needs rebalancing. For the most part, this negates the need to sell stocks or bonds to balance out the portfolio. It’s an extremely tax efficient way to rebalance — and it is completely automated!For example, when you signed up for an iInvest® account, our registered investment advisors might recommend that your portfolio allocation is roughly 60% stocks and 40% bonds. If stocks perform well during a certain period, your portfolio allocation might move to 65% stocks and 35% bonds. Inadvertently, your investment is now exposed to more risk (especially if this compounds over time to create an even larger allocation gap). So we reallocate your portfolios accordingly, while also taking your new deposits or dividends and use them in the rebalancing process.

Why is more risk a bad thing?

Because when you set your original allocation, you did so with a particular goal in mind. A shift in allocation might make it difficult for you to reach your goal in your desired time frame because suddenly, your investment will be more susceptible to market volatility.

The Best Part

Rebalancing prevents you from making the classic behavioral mistake of buying high and selling low. It takes emotion out of the equation because you adjust your portfolio to its original state, regardless of whether the market’s up or down. Remember, it’s all about the long game!


Automated Portfolio Rebalancing

Get Started with iInvest®

iInvest® handles your investments so you don’t have to. We make it easy to roll over your retirement accounts, and everything we do is designed to help you achieve your long-term investment goals in the most tax-efficient way possible. Contact us today to discuss what we can do for your and your assets with one of our investment specialists.