Portfolio Rebalancing: The Art of Buying Low and Selling High

How Often Should I Review And Rebalance My Investment Portfolio? 

Does your investment strategy need a checkup? We explore why your portfolio isn't a "set it and forget it" proposition in this essential episode on investment maintenance.

Ever wondered about the difference between rebalancing and reviewing your investments? Wealth advisor Cody Stansell breaks down these critical concepts using clear, practical examples that demystify portfolio management. Rebalancing—the practice of systematically buying low and selling high—should happen quarterly at minimum to maintain your target allocation as market movements naturally shift your investments off balance.

But when it comes to reviewing and potentially changing your investment strategy, Stansell offers surprising advice: don't do it too often. Constantly adjusting your portfolio based on market noise or weekly news cycles typically hurts more than helps. Instead, focus on thorough research upfront, make conviction-based decisions, and stick with them unless fundamental economic conditions change significantly. That said, completely neglecting your investments for years is equally problematic—an annual portfolio review provides the right balance for most investors.

We also tackle a common investment mistake: choosing funds based solely on past performance. Different mutual funds have different objectives—some prioritize stability and income while others aggressively pursue growth. Understanding these distinctions is crucial for building a portfolio that aligns with your financial goals and timeline. Remember that yesterday's star performer might not be tomorrow's winner as economic conditions evolve.

Ready to give your investment portfolio the attention it deserves? Visit Steadfastwealthplanning.com for a complimentary consultation or call 469-606-2040 to start building a financial future aligned with both smart planning and Christian values.

To learn more about Steadfast Wealth Planning visit:
https://www.SteadfastWealthPlanning.com
Steadfast Wealth Planning
5550 Granite Pkwy, STE 270
Plano, TX 75024
469-606-2040

Episode Transcript

Speaker 1 (00:04):
Welcome to the Steadfast Wealth Planning
Podcast, where faith andfinancial wisdom come together.
Hosted by Cody Stansel, ownerand senior wealth advisor, we
provide comprehensiveChristian-based financial
planning to help families,individuals and business owners
build a life they're proud tolive.
From investment management andtax planning to preparing for

(00:25):
retirement, we're here to guideyou with clarity, integrity and
purpose.
Let's get started.

Speaker 2 (00:37):
Your investment portfolio is not a set it and
forget it deal.
Regular review and rebalancingcan help keep your financial
goals on track.
Welcome back everyone.
I'm Sofia Yvette, co-host slashproducer, back in the studio
with Cody Stansel, senior wealthadvisor for Steadfast Wealth
Planning.
Cody, how's it going today?

Speaker 3 (00:58):
Hey Sofia, it is summertime, kids are out of
school, but it's early summer,so they're not annoying us yet.
I know once we hit July, julyor August, we'll be ready for
them to go back to school, butwe're not there yet, so we're in
a sweet spot, so it's greatawesome, cody, let's get into it
.

Speaker 2 (01:16):
Cody's smart investing is more than just
about picking stocks.
It's about staying proactive.
Let's talk about how oftenpeople should revisit their
portfolios.
So, cody, how often should Ireview and rebalance my
investment portfolio?

Speaker 3 (01:33):
Yeah, great question.
Two different factors thererebalance and review A little
bit different.
Rebalance is a term we use inour industry quite often, but I
think it's confusing to a lot ofclients.
A lot of times I'll tell themlike, yeah, we rebalanced your
portfolio, and they say, okay,cool, what does that mean?
Rebalancing, in essence, isjust buying low and selling high

(01:54):
.
It's just bringing yourinvestments back into alignment.
And what I mean by that is togive an example, like a simple
example, let's say your 401k isa hundred,000, right, just to
make the math simple, and you'vedecided to invest them in two
mutual funds, one 50%, the other50%.
Naturally, over time, onemutual fund is going to make a

(02:16):
little bit more or do a littlebit better than the other one.
They can both do well, they canboth go up, but naturally
there's going to be one thatdoes a little bit better than
the other and they won't havethe exact same performance in
return.
And, fyi, if they do have thesame return, then you should
have just bought one of them,because they're doing the exact
same thing, right?
One of them is going to do alittle bit better.
So naturally, let's say, yourbalance grows from 100,000 to

(02:39):
110,000, but one mutual fund.
Once again, since it's done alittle bit better, it's now
naturally 55% of your overallbalance and the other mutual
fund is 45%.
So rebalancing is just apractice of bringing those
allocations back into that 50-50mix that you originally bought,
right?
So what you're doing isnaturally selling high.

(03:02):
You're selling some of the 55%mutual fund and buying some of
the 45%.
So naturally, rebalancing isjust like I said earlier,
selling high and buying low tobring those balances back in
line.
We rebalance portfolios, nomatter where your allocation is,
at least every quarter, so fourtimes a year.

(03:23):
That's just practice in ourindustry.
But when we do have volatiletimes in the market, like we've
seen so far, to start this year,2025, there's more volatility,
so there's more opportunities tonaturally buy low and sell high
by rebalancing your portfolio.
The second part of that sorebalance and review.
Obviously the second part isreview, and how often should I

(03:47):
review my investments?
In my example earlier, this iswhere you did 50% each into
those two mutual funds, but theygrow to 55 and 45.
When is it time to reassess?
Okay, should I stay 50-50?
, should I stay 55-45 or 70-30?
Reviewing those investments anddeciding what your overall

(04:09):
allocation is.
That's different thanrebalancing, right?
So this might surprise a lot offolks, but you actually should
review your investments lessoften than you think.
It doesn't do you any good thatevery week, every Friday,
you're changing your allocationhearing the noise whether it's
the internet or the TV anddrastically changing your

(04:31):
investment allocation once aweek or once a month.
So you should feel convicted inyour decision of okay, I've
done the research, I feelconfident, I should have 50 in
this mutual fund, 50 in thismutual fund, and unless
something changes with theeconomy or changes fundamentally
with the market, that's wherereassess and okay, instead of 50

(04:55):
, 50, should it be 60, 40, orshould I replace one of these
mutual funds entirely and bringa new mutual fund in?
So I would warn folks, don't doit too often.
Do your research, do a lot ofthe front end work and then feel
convicted and just monitor andrebalance as you go.

Speaker 2 (05:15):
Now follow-up question for you what are the
risks of not reviewing yourinvestments regularly?

Speaker 3 (05:23):
Yeah.
So great question.
On the flip side of that is setit and forget it.
It's five years, seven yearsdown the road and you haven't
looked at your 401k or yourinvestments the entire time.
Don't do that either, right?
We don't want you to just notlook at them so honestly every
year.
It's a good practice just to goin.
I have a lot of clients that,like I said earlier, check their

(05:44):
balance every Friday they login.
I have clients that haven'tchecked their balance in a
couple of years and there's notnecessarily a right or wrong
answer.
Everyone's a little bitdifferent.
But at least once a year wewant to meet with clients and
say, ok, here are your currentinvestments.
Obviously, if they're a clientof ours, they've entrusted us to
choose our investments for themand obviously we've talked

(06:05):
about that.
But they've entrusted us tolook at those investments.
But once a year we want to sitdown with them and say, okay,
here's where we're at.
This is why this is our outlookon the overall market.
Let us know any questions orany drastic changes in your
opinion.
So short answer is once a yearto really sit down and look at

(06:25):
your investments Now.

Speaker 2 (06:26):
Cody, any final words for our listeners today on
reviewing and rebalancing yourportfolio.

Speaker 3 (06:33):
Yes, I get this question quite often as well.
Mutual funds not a lot ofpeople know this mutual funds,
etfs all of them have slightlydifferent goals.
Right, they're all trying toaccomplish something slightly
different.
Take like Tesla stock is goingto perform and do their goals
much different than Coca-Colastock, who's been around more

(06:55):
than a century, pays a gooddividend, stable.
They're both stock marketexposure, but they're going to
behave in very differentfashions, right?
Mutual funds are the same way.
So when people go in to their401k or their investment options
and they look and they just see, okay, which mutual fund has
done the best over the lastthree years or 10 years,

(07:17):
whatever it may be, that's notnecessarily the right exercise
because of, especially and Ikeep talking about a 401k,
because most folks have a 401kbut of your 401k investment
options, all of those mutualfunds have slightly different
objectives.
They're trying to accomplishsomething different.
Like in my previous point, someof your mutual funds.
Their goal is to pay a gooddividend, be stable.

(07:40):
When the market's up, they'renot going to be up as much, but
when the market's down, they'renot going to be down as much,
whereas other mutual fundsthey're all for growth.
Once again, that mutual fund mayinvest in Tesla or Apple or a
lot of technology, a lot ofgrowthy names.
So you can't just look athistorical performance and
decide oh, I want that oneBecause the economy might be

(08:01):
different.
You can't just look athistorical performance and
decide oh, I want that onebecause the economy might be
different.
Where interest rates are maydictate whether that mutual fund
does well or not.
So that's one that I get aquestion.
A lot is why don't I just pickthis mutual fund?
It's done the best over thelast five years, yes, and let's
look at it.
But because it's done so wellover the last five or 10 years
may not necessarily mean it'sgoing to do the best over the

(08:23):
next five or 10 years.
So it just really depends.

Speaker 2 (08:27):
Cody.
That was a great breakdown ofwhy regular portfolio reviews
matter.
Staying proactive is key,clearly, to long-term financial
success, and thank you for thoseinsights.
We'll see you all next time,absolutely.

Speaker 3 (08:40):
Thanks, sophia, and thank you for those insights.
We'll see you all next time,absolutely.

Speaker 1 (08:46):
Thanks, sophia.
Thanks for joining us on theSteadfast Wealth Planning
Podcast.
Ready to take the next step inyour financial journey, visit
steadfastwealthplanningcom for acomplimentary consultation or
call 469-606-2040.
Smart planning, christianvalues, a life well lived.
We'll see you next time.