Dan Day : Northwestern Mutual Wealth Management Company - A Balancing Act : Article: A Balancing Act

A Balancing Act

Rebalancing is all about risk control
Investing, like walking a tightrope, is an activity that requires good balance to overcome the risks involved. Your original asset allocation was set up to match your needs and your risk tolerance. If neither has changed, your allocation shouldn't either. Take the portfolio below, for example. A strong stock performance can cause a simple 50/50 mix to become unbalanced over time. Not only does the portfolio's allocation change, but also the portfolio's risk.

Over time, a portfolio may become unbalanced

Keeping Your Balance

Return to your original risk level by rebalancing
The only way to regain your balance and return the portfolio to the original risk level is through rebalancing. It is important to review your financial goals periodically with your financial representative. Talk to your financial representative about the importance of rebalancing.

Keep in mind that an investment cannot be made directly in an index, and past performance is no guarantee of future results. This is for illustrative purposes only and not indicative of any investment. The sale of an investment for the purposes of rebalancing may be subject to taxes.

Source: ©2007 Morningstar, Inc. All rights reserved. Used with permission. Note: The sale of an investment for the purposes of rebalancing may be subject to taxes. This is for illustrative purposes only and is not indicative of any investment. Risk is measured by standard deviation. Standard deviation is a statistical measure of the extent to which returns vary from the expected returns. Government bonds are guaranteed by the full faith and credit of the United States government as to the timely payment of principal and interest. Stocks are not guaranteed and have been more volatile than bonds.

Source: Stocks—Standard & Poor's 500®, an unmanaged group of securities and considered to be representative of the stock market in general; Bonds—Five-year U.S. Government Bond. The Northwestern Mutual Financial Network is a marketing name for the sales and distribution arm of The Northwestern Mutual Life Insurance Company, its affiliates and subsidiaries. Securities offered through Northwestern Mutual Investment Services, LLC (NMIS), member NASD and SIPC, 1-866-664-7737. NMIS is a wholly owned company of Northwestern Mutual. Northwestern Mutual is not a broker-dealer. No investment strategy can guarantee a profit or protect against a loss.

Before you agree to receive financial planning services, please see complete information and disclosures in The Disclosure Brochure and review the terms of the Northwestern Mutual Wealth Management Company Planning Engagement Agreement. These may be obtained from your Wealth Management Advisor.

Northwestern Mutual Financial Network is the marketing name for the sales and distribution arm of The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM), and its subsidiaries and affiliates. Daniel Macleish Day is a Representative of Northwestern Mutual Wealth Management Company®, Milwaukee, WI (WMC), a wholly-owned company of The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM), and limited purpose federal savings bank. All financial planning, investment management and trust services are offered only through WMC by properly credentialed Representatives who operate from agency offices of WMC. WMC is not a broker-dealer or insurance company and does not offer insurance products or brokerage services. Representative is an Insurance Agent of NM (life insurance, annuities and disability income insurance) and Northwestern Long Term Care Insurance Company, Milwaukee, WI, a subsidiary of NM (long-term care insurance), and a Registered Representative of Northwestern Mutual Investment Services, LLC (NMIS), 707 17th St Ste 3700, Denver, CO 80202-3404, 303-390-5750, a wholly-owned company of NM, broker-dealer and member FINRA (www.finra.org) and SIPC. All brokerage services are offered only by NMIS. NM and The Cunningham Financial Group are not broker-dealers, registered investment advisers or federal savings banks. There may be instances when this agent represents insurance companies in addition to NM or its affiliates.

Investment products are not insured by the FDIC, are not deposits or other obligations of, or guaranteed by, NMWMC or its affiliates and are subject to investment risks, including possible loss of the principal amount invested.

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