Is your portfolio prepared for the next market correction?

During sustained bull market periods, it’s easy to forget that the financial markets have a habit of correcting themselves from time to time. While corrections are a healthy way for the markets to restore equilibrium, they’ve been known to cause concern among investors. The best way to head off any anxiety and stay the course when a correction occurs is to prepare now by reviewing your portfolio. Be sure to keep the following goals in mind:

• Maintain adequate diversification. Holding a range of investments across asset classes, investment sectors, and geographic regions can help lessen the impact of market fluctuations on your portfolio. Diversification helps create greater balance between performing and underperforming investments in your portfolio.
• Manage risk. Even balanced portfolios can suffer from style drift when markets fluctuate. A buy-and-hold strategy that doesn’t include annual rebalancing can lead the best-performing asset class to dominate the portfolio when balance and diversification are most important. Regular rebalancing of your asset allocation can help manage risk over time.
• Put a clear strategy in place. Working with a financial professional to implement an asset allocation strategy and disciplined approach to risk management is still the best way to prevent emotion-based decisions that can derail your long-term goals.

If you have concerns about whether your portfolio is prepared for a market correction, reach out today to schedule a portfolio review.

^{Rebalancing may be a taxable event. Before you take any specific action be sure to consult with your tax professional. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. Diversification does not guarantee profit or protect against loss.}