Columnist image
Pattie Lovett-Reid

Chief Financial Commentator, CTV


As an investor, you would not have wanted to bet against the Trump administration since the Nov. 8 U.S. presidential election. The TSX, DOW, S&P and Nasdaq all hit record highs this past week and it is easy to think the trajectory is only going to go one way – up. We all know that isn’t the case. However,  the thought of rebalancing your portfolio in an up market can be hard to do for fear you are leaving gains on the table. But that is exactly what you should be considering.

Disciplined investors strive for balance in their portfolios. Your asset allocation — the mix of stocks, bonds and cash — is what makes diversification work. Choosing the right asset allocation is likely the most important investment decision you’ll make, so it’s crucial to get it right. Your target mix of stocks and bonds should be based on your time horizon, the expected rate of return, your ability to emotionally and financially withstand a loss and of course the sleep factor, your own comfort level with the ups and downs of the markets.

So if you are going to invest in the markets, here are a few considerations:

  • Block out short-term noise. Market volatility is part of investing and ideally have a minimum five-year time horizon for investment.
  • Reduce risk. Help reduce your risk by exposing your portfolio to a variety of asset classes, industries and geographic locations.
  • Quality will endure. Hold quality investments in a well-diversified portfolio. Seek investments that are not only price attractively but are well-managed, have a competitive advantage and have a track record of not only paying a dividend but increasing the dividend.

When to re-balance?

The recommendation is to re-balance on an annual basis giving you structure and discipline. It helps you to keep your emotions in check, which might encourage you to buy high and sell low, or, on the flipside, do nothing. 

CTV's Chief Financial Commentator Pattie Lovett-Reid offers a financial tip of the day during the month of February for Your Money Month.