How and when should you rebalance?

When was the last time you checked your portfolio’s asset allocation? If your answer is “never” or “I can’t remember,” then it may be time to rebalance. 

Maintaining the right balance of stocks and bonds across all your accounts is important when it comes to managing risk, and rebalancing every year or so helps you do that. 

Here’s what to know if you want to stay on track and reach your long-term goals:

What is rebalancing?

Rebalancing your portfolio means selling investments in an asset class that is overrepresented in your portfolio and buying investments in an asset class that is underrepresented in your portfolio. For example, if you have 90% stocks and 10% bonds but want to start taking on less risk, you’ll probably want to adjust.

When should you rebalance? 

1. A common strategy is to rebalance annually.

2. Another is to rebalance as needed: If you’re approaching retirement, for example, you may want to adjust your asset allocation to reduce your risk.

3. If you just got a huge raise, you’ll probably want to make sure your funds are working to their best potential. 

Is there a wrong time to rebalance? 

If a market change, good or bad, has you worked up, it’s probably best to resist the urge to buy or sell immediately. Remember, you can reach out anytime for input on whether the change you want to make is in line with your future plans. 

Feeling uncertain about your rebalancing strategy? 

It’s important to regularly check in with your portfolio and make adjustments as needed. But it’s okay if you’re not sure when or how to make those adjustments on your own.

Wondering if your portfolio is still structured in a way that fits your needs? Let’s discuss your goals and questions today.