Asset allocation is the big decisions that you make. How much will you have in stocks? How much will you have in bonds? How much, if you do, will you have in real estate? Those decisions really make a major difference. How much will you have in a money market fund? And one of the sad realities is many people who are investing their 401K start off with such a small amount of money the first few days that they’re employed.

And they say, “Well, it’s so small. I don’t think I’ll do anything about investing. I’ll just put it in a money market fund.” And then they leave it there. Over the years accumulate more and more and more and keep putting it in a money market fund. That may be saving. But it sure as the dickens is not investing. The really important question about asset allocation has to do with how long is the money going to stay invested. And if it’s going to stay invested for more than ten or 15 years it should be very definitely in equities.

If it’s going to be invested for less than a year it should be in a money market fund. Going to be invested for less than three years most of it should be in bonds. Because that’s the tradeoff between risk and return that you ought to be making.

Rebalance is all about the same basic proposition, nothing cute, nothing clever, very sensible. Some variety in choice because some people are in their interior very cautious people. Some people are willing to live with more of the ups and downs in the market. So they ought to have different investment vehicles. So we’ve got several different investment vehicles so you can choose what’s right for you. And then given that choice we can do the balancing in a very sensible way using ETFs and index funds for almost all of it.