While last year's 33-percent jump in the value of U.S. stocks is great news for most investors, it probably means your asset allocation is out of whack and needs to be rebalanced.
Because of differing rates of return generated by each type of mutual fund -- such as growth funds, mid-cap funds and international funds -- your overall investment portfolio may no longer reflect your original financial plan. Consumer Reports magazine says be careful if you're considering rebalancing.
Avoid selling off shares of a fund that has grown to a larger-than-desired proportion of your portfolio, the experts say. Unless your funds are held in a tax-deferred retirement savings plan, selling them could generate taxable capital gains.
Instead of selling off your best performer, direct the fund manager to stop buying through the automatic reinvestment of dividends and capital gains. Steer that money and any new investment dollars you regularly add to the fund category you want to beef up.
If you have a poorly performing fund, you may want to consider selling it and selecting another with similar investment objectives that looks more promising.
