Besides re-balancing your retirement plan it is also a good idea to review your plan’s performance.  We like to look at how the plan is doing overall and how each individual investment is doing.  Then we make changes to our overall plan or individual investments.  For example, this year one of our growth fund investments is not meeting our standards.  Its performance compared to the overall market, and compared against other growth funds in our portfolio, is poor.  While it is earning us a small percentage, it is not even beating our value or income investments in the plan.  This is not just based on one year performance but three, five and ten years.  Because of the risk the growth sector it is in, it should be performing better.  Greater risk should mean greater return when compared to other funds in this sector.  So we have decide to make some changes.

First, because the growth section of our plan is out of balance by 2% too much, we will move 2% of this non-performing fund to the value or income section of our plan.  We will keep the current dollars in the non-performing growth fund but we will put less money into it.

Second, we will reduce the amount of money that we put into this fund each pay period.  We will put the money into another growth fund or into another fund in our plan that is performing well.  For example, say each pay period we are putting 20% of the money we are putting into our retirement plan in this non performing fund.  We simple lower it to 10% or even 5%.  We then have another investment in our plan that is performing well receive the 10% or 5%.  This way we are re-balancing our plan’s performance and hopefully a better return.