Terms & Definitions

Rebalancing is bringing your portfolio back to your original asset allocation mix. This is necessary because over time some of your investments may become out of alignment with your investment goals. You’ll find that some of your investments will grow quickly, while others decrease. By rebalancing, you’ll ensure that your portfolio does not overemphasize one or more asset categories, and you’ll return your portfolio to a more suitable level of risk.

Model Allocation
Your asset allocation model is a personal mix of assets that has the highest probability of meeting your goal at a level of risk you can live with. As you get closer to meeting your goal, you’ll need to be able to adjust the mix of assets.

Asset Allocation
An asset allocation involves dividing your investments among different assets, such as stocks, bonds, and cash. It is an investment strategy that aims to balance risk and reward by apportioning a portfolio’s assets according to an individual’s goals, risk tolerance and investment horizon.

A stock index or stock market index is a method of measuring the value of a specific portion of the stock market. It is computed from the prices of selected stocks. A market index tracks the performance of a specific “basket” of stocks considered to represent a particular market or sector of the U.S. stock market or the economy. There are indices for almost every conceivable sector of the economy and stock market.

*Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment decision. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Diversification and asset allocation do not ensure a profit or protect against a loss.