I came across this great article in USA Today, Protect your nest egg: Rebalance your 401(k) to avoid risk and I thought you would enjoy it. 

For those of you who have Matson Money accounts, please note that Matson accounts automatically rebalance every quarter, if necessary. 

Protect Your Nest Egg: Reblance Your 401(k) to avoid risk

A roaring stock market is generally a positive for investors, but Wall Street's robust performance may actually be having an adverse effect on some Americans' 401(k)s.

A second-quarter analysis by Fidelity Investments of its 13 million 401(k) accounts found that 27% of account holders in their mid- to late-50s had a stock allocation that was 10% higher than what's recommended.

Another 10% of those in that age group, along with 11% of account holders 50 to 54, had a 401(k) that was completely invested in stocks. If the market takes a plunge, that's a potentially perilous scenario for those on the cusp of retirement.

"That's concerning, especially at that age,'' says Jeanne Thompson, vice president at Fidelity Investments. "You want to make sure you have a little more balance, that you hold a little bit in bonds (and cash) ... so you don't lose your whole nest egg, or much of it, in one swoop.''

We at Balanced Wealth Management endorse an investing strategy called Modern Portfolio Theory. It is an investing technique that does not involve trying to time or forecast the stock market or speculate and gamble with your retirement future.

Modern Portfolio Theory does involve a lot of math, statistics, economics and financial know how, but the fundamental concepts are very clear and easy.

The basic Principles are fairly simple:

• Own Equities (Stocks)
  
• Diversify
  
• Rebalance periodically
  
• And…Don’t get hung up on the details.
  

But…the biggest risk is not the stock market; it’s really the individual investor that can trash the whole system. There is a company called Dalbar Research that has studied this phenomenon over a period of decades and compared the stock market rate of return with what the typical investor earns on their investments. For example US institutional mutual funds have earned in excess of 9% while the typical investor has only earned a little over 3%.