Financial Navigating in the Current Economy: Ten Things to Consider Before You Make Investing Decisions

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1. Draw a personal financial roadmap.
2. Evaluate your comfortable zone in taking on risk
3. Consider an appropriate mix of investments
4. Be careful if investing heavily in shares of employer's stock or any individual stock
5. Create and maintain an emergency fund
6. Pay off high interest credit card debt
7. Consider dollar cost averaging
8. Take advantage of "free money" from employer
9. Consider rebalancing portfolio occasionally
10. Avoid circumstances that can lead to fraud

9.         Consider rebalancing portfolio occasionally. 

Rebalancing is bringing your portfolio back to your original asset allocation mix.  By rebalancing, you'll ensure that your portfolio does not overemphasize one or more asset categories, and you'll return your portfolio to a comfortable level of risk.

Stick with Your Plan: Buy Low, Sell High -- Shifting money away from an asset category when it is doing well in favor an asset category that is doing poorly may not be easy, but it can be a wise move.  By cutting back on the current "winners" and adding more of the current so-called "losers," rebalancing forces you to buy low and sell high.

You can rebalance your portfolio based either on the calendar or on your investments.  Many financial experts recommend that investors rebalance their portfolios on a regular time interval, such as every six or twelve months.  The advantage of this method is that the calendar is a reminder of when you should consider rebalancing.  Others recommend rebalancing only when the relative weight of an asset class increases or decreases more than a certain percentage that you've identified in advance.  The advantage of this method is that your investments tell you when to rebalance.  In either case, rebalancing tends to work best when done on a relatively infrequent basis.