Episode 92: Mailbag – Should You Be Rebalancing?

Today’s Prep:

Are you wondering if you should do a rebalance? David answers this question, as well as two others from the mailbag this week.

(Click the featured times below to jump forward in the episode)

Equipping Points:

David gets a lot of questions from clients, some that repeat often. Today, we cover three different questions common among clients and listeners. You may even find that one or more of these relate to your own situation! 

One listener says she has almost $500,000 in a 401(k) and increases her percentage of contribution a little bit every year after a raise. What is the benefit of rebalancing and why should you do it? David shares an example of what rebalancing can look like when it comes to your allocations. Regardless of how much you’ve been able to set aside, it’s worth considering a rebalance.

If you have dozens of mutual funds, is that diversification? Is more always better? How do you achieve proper diversification? What kind of fees are you paying? Contrary to what you might think, this could actually be counterproductive! So, what should your portfolio look like instead?

Last week, we talked about Social Security, but one listener is confused about what is allowed when it comes to earning income while claiming Social Security. What are the rules when it comes to retiring and getting Social Security? What happens if you still continue to work part-time or even full-time? David outlines the basics, but always be sure to check with a financial advisor to make sure you make a strategic decision when it comes to your Social Security benefits.

Listen to the entire episode or click on the timestamps below to skip ahead.

[1:47] – Mailbag: Should I rebalance?

[2:48] – How does David breakdown a portfolio?

[3:47] – Why is a rebalance important?

[8:29] – Mailbag: Is 33 different mutual funds adequate diversification?

[13:47] – Mailbag: Can I claim Social Security benefits and still earn income?

Today’s Takeaway:

By rebalancing, you get brought back to what you chose as the portfolio allocation, the risk allocation, that you want. How often should you do that? If you have a 401(k), I suggest you rebalance semi-annually.

– David Dickens

Additional Resources:

PODCAST: What’s the Future of Social Security?

PODCAST: 3 Reasons to Review Your Tax and Estate Plan Now


More From David:

The host: David Dickens

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