The financial markets have had their moments in 2023. And if you haven’t checked your portfolio and retirement plan asset allocations in a while, you could be in for a jolt. Your allocations may be out of line with your current investment goals, timeline and tolerance for risk, but you can fix the problem by rebalancing asset classes.
TO REBALANCE OR NOT?
Let’s say you set or rebalanced your allocation at the beginning of 2023. If your investment time frame and risk tolerance are basically the same currently, you have it easy. Compare your current asset allocation to the allocation you set in January.
Generally, if one or more of the asset categories varies by more than 5%, you should consider rebalancing the weight in each asset class to better match your investment strategy.
If your investment goals or risk tolerance have changed significantly, you’ll probably want to develop a new allocation strategy. The objective is to invest aggressively enough to meet your timeline and goals, but not make you nervous.
Work with your financial professional to evaluate the need to rebalance your portfolio at least annually. Your tax advisor can check for tax repercussions before you make any moves.