Jay Vivian, former managing director of the IBM Retirement Funds, on the virtues of automatic rebalancing. More on how to rebalance stress-free.


Asset allocation is a vitally important part of any investing. Basically, it’s pretty straightforward. It’s the relative weight that you invest in the different kinds of assets you can invest in. So at the highest level it might be that you invest half in stocks and half in bonds. So if that was your asset allocation, your target mix would be 50/50. And that would be how you try to stay invested. You’d try to rebalance to that.

The Rebalance products are basically multi-asset-class funds at a couple of different risk levels. Or age appropriate levels, if you will. And what those funds do is they automatically rebalance themselves. So if stocks go up, they might sell some of those stocks and buy some of the other classes. If stocks go down, they might sell some of the other asset classes and buy stocks with them.

This is really good for somebody who doesn’t want to have to check it every month or every three months because the products themselves are automatically doing that rebalancing and you don’t have to worry about it. You don’t get detailed reports on it. You don’t have to check your target. You don’t have to worry if you’re a little older than you were last time and maybe the risk level has changed. So that’s a really good thing about these products.

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