Rebalancing is often the most challenging aspect of an asset allocation strategy because it is counterintuitive.  Rebalancing requires you to sell a little of the investment that went up and buy more of what went down.  Can you imagine buying stocks in early 2009 when the market was more than 60 percent below its high and every expert on television was predicting lower prices?  That is exactly what the strategy required, and the only investors who were rewarded with excess returns by the end of 2009 were those who rebalanced religiously.  The temptations to deviate from a simple investment strategy are great.  Many people are not able to stay the course.  There is, of course, an alternative.  If you do not have the discipline to manage an asset allocation strategy yourself, then hire a competent, low-fee advisor to do it.

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Last Updated: 6/25/2018