The financial markets have been on a wild ride in 2020. The year began with a continuation of the bull market that started in 2009. The longest bull market in history, however, came to an abrupt end with the arrival of the COVID-19 pandemic.1

From February 20 to March 23, the S&P 500 fell by 33.67%. From that lowpoint through August 14, the index has climbed 50%. In fact, the S&P 500 has recouped all earlier losses and is now in positive territory year-to-date.2

However, that doesn’t mean your portfolio is back where it started at the beginning of the year. Your portfolio is probably allocated across a variety of asset classes. The exact allocation should be based on your specific needs, goals and risk tolerance.

Diversification, or the allocation of funds across many different assets, helps to minimize risk exposure. If one asset performs poorly, only that portion of the allocation suffers. The loss may be offset by gains in other asset classes.

Your various asset classes are always moving in different directions. For example, consider a few asset classes and their index performance through July of this year:3

BloomBarc US 1-5 Yr Government Idx (Short-term Government Treasuries): 4.36%

Bloomberg Commodity Index TR (Commodities): -14.80%

S&P 500 Index (Large-Cap U.S. Stocks): 2.38%

S&P 600 Smallcap (Small-cap U.S. Stocks): -14.48%

That’s just a sampling of some common asset classes that are often included in diversified portfolios. Over time, your allocation becomes out of balance. For example, your allocation to small cap stocks may have declined this year as the asset class has declined in value. Similarly, your allocation to short-term treasuries may have increased as those assets have risen in value. The result is an allocation that may be very different than what you intended.

One strategy is to review and rebalance your portfolio regularly. In fact, you can set your account up for automatic rebalancing, so at regular periods, assets will be sold and purchased to get back to your original allocation.

If you haven’t reviewed your allocation lately, it’s possible it doesn’t align with your current goals and risk tolerance. We can help you implement the right allocation for your needs and continue to rebalance the portfolio on an ongoing basis.

Let’s connect soon and start the conversation. Contact us today at MasterPlan Retirement Consultants.

1https://www.cnn.com/2020/03/11/investing/bear-market-stocks-recession/index.html

2https://www.google.com/search?q=INDEXSP:.INX&tbm=fin&stick=H4sIAAAAAAAAAONgecRowi3w8sc9YSntSWtOXmNU5eIKzsgvd80rySypFBLnYoOyeKW4uTj1c_UNDM0qi4t5FrHyePq5uEYEB1jpefpFAAAU6wGESAAAAA#scso=_StQ2X43rM4q_tQadupGwDA1:0

3https://personal.vanguard.com/us/funds/tools/benchmarkreturns

Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 20364-2020/8/20

Advisory services offered through MasterPlan Retirement Consultants, Inc. Insurance services offered through Fricks and Associates, Inc. Tax services offered through MasterPlan Tax Services, Inc. The aforementioned are affiliated companies.