Letting Your Accounts Collect Dust
Sitting on your duff and waiting for your investments to eventually pan out isn’t the worst idea in the world, but it’s not a good one. The investment landscape isn’t static. So get active — that means reviewing your investments on a regular basis, and adjusting based on your asset allocations and market conditions.
Issues of “weighting” might come into play as those changes occur: Let’s say you have $2,000 invested — half in stocks and half in bonds. In a few years, if bonds stay flat while your stocks grow by 50%, you’ll have $1,500 in stocks and $1,000 in bonds, or a 60/40 mix instead of your original 50/50. Depending on your preferred asset mix, you might need to re-balance your allocations.
Not to mention, if the landscape points to a major shift — say, rising interest rates threaten to hurt your bond holdings, or a trend bodes well for a particular asset class — you’ll want to put yourself in a position to win (or not lose).