Portfolio Re-Balancing Time

We have been saving for our son’s college education since he was born. Initially I used part of a tax refund we had the year he was born to fund a Roth IRA. At the time I had my reasons for investing this money in this vehicle. Then I learned more about 529 accounts and decided to start saving that way instead. He’s 2 and a half years old and we have been funding a 529 account for him for a year and a half now.

At the time we opened his 529, my husband and I agreed that our son had plenty of time to ride the ups and downs of the market, so we invested his money on a aggressive portfolio (100% stocks). It has done very well since we started. The rate of return for the time his money has been invested on this fund has been about 18%. But things have changed and our confidence in this market has declined. So, we have decided that even though he still has at least 16 years until he needs this money, there is no reason to leave his portfolio exposed to market fluctuations in such a way.

Today I exchanged the total balance on his account to a more balanced portfolio, still considered aggressive but now with some bond exposure. We have gone from 100% stocks to 75% stocks, 25% bonds. We also thought that it was important to have some exposure to international stocks to counterbalance the current dollar weakness.

What up until recently had been a very attractive investing strategy for us, has become less than ideal due to current events. Our risk profile has changed during the last few months and we have needed to adjust our portfolio to reflect that. I hope that you take the time every now and then to follow up on current market conditions and to re-evaluate your portfolio’s situation. It doesn’t take too long to protect your assets this way.

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  1. Oxy 10 years ago

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