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Retirement Videos 84 videos

Finance: What is a redemption charge?
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A redemption charge is a charge applied when you redeem shares of a mutual fund in a deferred commission purchase structure.

Finance: What is the Tax Reform Act of 1986?
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What was the Tax Reform Act of 1986? Hit play to find out.

Finance: What are Passive Investing and Passive Investors?
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What are Passive Investing and Passive Investors? Passive investing and passive investors are ones who opt to ride the market out over the long ter...

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Finance: What does it mean to rebalance a portfolio? 1 Views


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What does it mean to rebalance an account, and will we need a yoga mat? Hit play to find out.

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Transcript

00:00

finance a la shmoop what does it mean to rebalance an account alright people

00:08

here's your account pretty broad-based equity portfolio and pretty pie chart -

00:13

they're nice going there editor's 17% bank and insurance 14%

00:18

telecommunications 9% consumer comestibles 6% drugs legal ones 11%

00:25

chemicals in commodities 8% transport and whoa 35% tech well just five years

00:31

ago Tech was only 15 percent of your portfolio and it performs better than

00:36

double the returns of the rest of the market in that time period so Wow what

00:40

time is it need a high tech watch to answer no its rebalancing time why well

00:47

because you want to just compound at market rates and yes Tech has been

00:52

amazing and wonderful and loving but Tech can get crushed in bad times as

00:57

well and the huge 37% exposure to it is well keeping you up at night and it's

01:03

see it's gotten up 2% there since we started this video it's just too much [girl waking up in bed at night]

01:07

risk attributed to one relatively narrow area of the investing economy even [pie with a risk tag on it]

01:12

though it touches everything well you're thinking about making tech more

01:15

representative of a balanced broad S&P 500 index fund where in that fund it [S&P 500 document]

01:21

represents on only say 11 or 12 percent so you sell some Apple you sell some

01:25

Google you sell some Amazon Facebook Netflix Microsoft and you buy a [company logos]

01:29

smattering of high dividend high yielding defensive stocks like Chevron [military plane flying]

01:33

for Dow Chemical and Bank of America it's kind of defensive in practice [company logos]

01:38

portfolio managers rebalance their portfolios all the time so they

01:42

represent the promise they made to investors when they raise the money in [scale with tech out-weighted by diverse products]

01:46

the first place to be a fully diversified fund taking only market risk

01:51

in the process and if they still need to do any rebalancing beyond that and well [people doing yoga in park]

01:55

then they just enroll in a hot yoga class

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