Is it time to rebalance your portfolio? Your portfolio should align with your risk tolerance, retirement timeline, and long-term goals. These factors may help you decide on the appropriate asset allocation for your unique situation.
When you rebalance your portfolio, you sell off higher-performing strategies, reinvest the returns, or invest the return into other strategies. Rebalancing your portfolio may help you manage portfolio risk and help improve returns. You may want to rebalance it to help ensure your portfolio’s strategies continue to support your goals. In general, there are three approaches to how often you should rebalance your portfolio, including:
Once you determine which asset classes have deviated from the planned allocation or your financial plan, you may want to rebalance if appropriate. Here are the steps to rebalancing:
While you don’t have to worry about taxes with tax-advantaged accounts like 401(k)s, you will be responsible for capital gains tax on taxable accounts. Consult your tax and financial professionals to help you determine how rebalancing will impact your taxes.
In the asset classes that have exceeded the planned allocation.
The asset classes that have fallen below your desired allocation, invest in new strategies aligned with your risk tolerance and goals or stay in cash to invest later.
Rebalancing an investment portfolio can be challenging. A financial professional can help you determine if rebalancing is appropriate for your situation, help with the process, and determine the ideal strategies for your portfolio’s new allocation.
SWG2241771-0622c The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of information provided at this website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information and programs made available through this website.
For those who are looking for financial advice, there are many options. Deciding who to work with is a challenging problem. At The Whisler Agency, we know that it is your retirement, and you should have control over it. We offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!