Steadfast Wealth Planning Podcast

Portfolio Rebalancing: The Art of Buying Low and Selling High

• Cody Stansell • Episode 6

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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

Speaker 1:

Welcome to the Steadfast Wealth Planning Podcast, where faith and financial wisdom come together. Hosted by Cody Stansel, owner and senior wealth advisor, we provide comprehensive Christian-based financial planning to help families, individuals and business owners build a life they're proud to live. From investment management and tax planning to preparing for retirement, we're here to guide you with clarity, integrity and purpose. Let's get started.

Speaker 2:

Your investment portfolio is not a set it and forget it deal. Regular review and rebalancing can help keep your financial goals on track. Welcome back everyone. I'm Sofia Yvette, co-host slash producer, back in the studio with Cody Stansel, senior wealth advisor for Steadfast Wealth Planning. Cody, how's it going today?

Speaker 3:

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, july or August, we'll be ready for them to go back to school, but we're not there yet, so we're in a sweet spot, so it's great awesome, cody, let's get into it.

Speaker 2:

Cody's smart investing is more than just about picking stocks. It's about staying proactive. Let's talk about how often people should revisit their portfolios. So, cody, how often should I review and rebalance my investment portfolio?

Speaker 3:

Yeah, great question. Two different factors there rebalance and review A little bit different. Rebalance is a term we use in our industry quite often, but I think it's confusing to a lot of clients. A lot of times I'll tell them like, yeah, we rebalanced your portfolio, and they say, okay, cool, what does that mean? Rebalancing, in essence, is just buying low and selling high. It's just bringing your investments back into alignment.

Speaker 3:

And what I mean by that is to give an example, like a simple example, let's say your 401k is a hundred,000, right, just to make the math simple, and you've decided to invest them in two mutual funds, one 50%, the other 50%. Naturally, over time, one mutual fund is going to make a little bit more or do a little bit better than the other one. They can both do well, they can both go up, but naturally there's going to be one that does a little bit better than the other and they won't have the exact same performance in return. And, fyi, if they do have the same 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 a little bit better. So naturally, let's say, your balance grows from 100,000 to 110,000, but one mutual fund. Once again, since it's done a little bit better, it's now naturally 55% of your overall balance and the other mutual fund is 45%. So rebalancing is just a practice of bringing those allocations back into that 50-50 mix that you originally bought, right? So what you're doing is naturally selling high. You're selling some of the 55% mutual fund and buying some of the 45%. So naturally, rebalancing is just like I said earlier, selling high and buying low to bring those balances back in line.

Speaker 3:

We rebalance portfolios, no matter where your allocation is, at least every quarter, so four times a year. That's just practice in our industry. But when we do have volatile times in the market, like we've seen so far, to start this year, 2025, there's more volatility, so there's more opportunities to naturally buy low and sell high by rebalancing your portfolio. The second part of that so rebalance and review. Obviously the second part is review, and how often should I review my investments? In my example earlier, this is where you did 50% each into those two mutual funds, but they grow to 55 and 45.

Speaker 3:

When is it time to reassess? Okay, should I stay 50-50?, should I stay 55-45 or 70-30? Reviewing those investments and deciding what your overall allocation is. That's different than rebalancing, right? So this might surprise a lot of folks, but you actually should review your investments less often than you think. It doesn't do you any good that every week, every Friday, you're changing your allocation hearing the noise whether it's the internet or the TV and drastically changing your investment allocation once a week or once a month. So you should feel convicted in your decision of okay, I've done the research, I feel confident, I should have 50 in this mutual fund, 50 in this mutual fund, and unless something changes with the economy or changes fundamentally with the market, that's where reassess and okay, instead of 50, 50, should it be 60, 40, or should I replace one of these mutual funds entirely and bring a new mutual fund in? So I would warn folks, don't do it too often. Do your research, do a lot of the front end work and then feel convicted and just monitor and rebalance as you go.

Speaker 2:

Now follow-up question for you what are the risks of not reviewing your investments regularly?

Speaker 3:

Yeah. So great question. On the flip side of that is set it and forget it. It's five years, seven years down the road and you haven't looked at your 401k or your investments the entire time. Don't do that either, right? We don't want you to just not look at them so honestly every year. It's a good practice just to go in.

Speaker 3:

I have a lot of clients that, like I said earlier, check their balance every Friday they log in. I have clients that haven't checked their balance in a couple of years and there's not necessarily a right or wrong answer. Everyone's a little bit different. But at least once a year we want to meet with clients and say, ok, here are your current investments. Obviously, if they're a client of ours, they've entrusted us to choose our investments for them and obviously we've talked about that. But they've entrusted us to look at those investments. But once a year we want to sit down with them and say, okay, here's where we're at. This is why this is our outlook on the overall market. Let us know any questions or any drastic changes in your opinion. So short answer is once a year to really sit down and look at your investments Now.

Speaker 2:

Cody, any final words for our listeners today on reviewing and rebalancing your portfolio.

Speaker 3:

Yes, I get this question quite often as well. Mutual funds not a lot of people know this mutual funds, etfs all of them have slightly different goals. Right, they're all trying to accomplish something slightly different. Take like Tesla stock is going to perform and do their goals much different than Coca-Cola stock, who's been around more than a century, pays a good dividend, stable. They're both stock market exposure, but they're going to behave in very different fashions, right? Mutual funds are the same way. So when people go in to their 401k or their investment options and they look and they just see, okay, which mutual fund has done the best over the last three years or 10 years, whatever it may be, that's not necessarily the right exercise because of, especially and I keep talking about a 401k, because most folks have a 401k but of your 401k investment options, all of those mutual funds have slightly different objectives. They're trying to accomplish something different. Like in my previous point, some of your mutual funds. Their goal is to pay a good dividend, be stable. When the market's up, they're not going to be up as much, but when the market's down, they're not going to be down as much, whereas other mutual funds they're all for growth.

Speaker 3:

Once again, that mutual fund may invest in Tesla or Apple or a lot of technology, a lot of growthy names. So you can't just look at historical performance and decide oh, I want that one Because the economy might be different. You can't just look at historical performance and decide oh, I want that one because the economy might be different. Where interest rates are may dictate whether that mutual fund does well or not. So that's one that I get a question. A lot is why don't I just pick this mutual fund? It's done the best over the last five years, yes, and let's look at it. But because it's done so well over the last five or 10 years may not necessarily mean it's going to do the best over the next five or 10 years. So it just really depends.

Speaker 2:

Cody. That was a great breakdown of why regular portfolio reviews matter. Staying proactive is key, clearly, to long-term financial success, and thank you for those insights. We'll see you all next time, absolutely.

Speaker 3:

Thanks, sophia, and thank you for those insights. We'll see you all next time, absolutely.

Speaker 1:

Thanks, sophia. Thanks for joining us on the Steadfast Wealth Planning Podcast. Ready to take the next step in your financial journey, visit steadfastwealthplanningcom for a complimentary consultation or call 469-606-2040. Smart planning, christian values, a life well lived. We'll see you next time.