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Financial Education

September 17, 2021

Year-end is a natural time to pause and assess your investment portfolio, whether it’s an employer-sponsored retirement plan, a brokerage account or both. What’s going well and where is there room for improvement? As we head into 2022, let these tried-and-true investing strategies help you get your investments in good condition for the new year.

Choose an appropriate asset allocation

How you divide your investments among major asset classes such as stocks, bonds and cash equivalents has a major influence on the returns your money will earn. Each asset class tends to react differently to market and economic conditions, so by dividing your money among them, gains in one asset class may help offset losses in another. The asset allocation that’s right for you depends on your goals, timeline and risk tolerance.

Maintain a long-term outlook

Investment prices routinely experience ups and downs, called volatility. If you don’t intend to tap your investments for many years, the day-to-day and even year-to-year performance shouldn’t be a major concern. What matters is the result at the end of your investment period. Historically, over the long term, the direction of the stock and bond markets has been up.

Take advantage of dollar-cost averaging

A systematic investment plan, often called dollar-cost averaging, can help manage volatility and even make it work in your favor.* It’s a very simple strategy: You invest a set dollar amount at regular intervals, regardless of what the market is doing. That way, you don’t risk buying all your shares at the “wrong time.” You buy fewer shares when prices are high and more shares when prices are low. If you invest in a 401(k) or other employer-sponsored plan, you’re already taking advantage of this approach with payroll deduction.

Rebalance regularly

Rebalancing means to adjust your portfolio periodically to keep it in sync with the target asset allocation and risk level you’ve chosen. For example, say you chose an asset allocation of 60% stocks, 30% bonds and 10% cash equivalents. If stocks did well since then, your allocation may have drifted to 67% stocks, 25% bonds and 8% cash equivalents — a more aggressive mix than you’re comfortable with.** To rebalance, you can sell shares in the asset class that’s overweight and use the proceeds to buy more assets in the underrepresented classes. Or you can redirect future money to the underweight classes to realign your portfolio over time.

Schedule a portfolio review with a PeoplesWealth Advisor

An honest assessment of your portfolio by an objective party can help you feel confident that your investments are working for you and will serve you well no matter what the year ahead brings. You can rely on the expertise and experience of the investment professionals at PeoplesWealth Advisors. Schedule a portfolio review by contacting a team member today.



* Dollar-cost averaging (systematic investing) cannot guarantee a profit or protect against loss in a declining market. You should consider your ability to continue investing during periods of low price levels.

** Asset allocations are hypothetical and not intended to suggest appropriate allocations for any individual.

Investment products: Not federally insured. Not a deposit of this institution. May lose value.


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