When do you need to rebalance your portfolio
Everyone has a plan to retire at some point. For some that time horizon may be shorter than it is for others. No matter when you plan to retire, it is important to keep an eye on your assets to make sure they are in alignment. There are several events that pop up in life that many individuals fail to think about that has a great impact on their financial future in thier portfolio.
Here are the typical events which trigger portfolio re-balancing of a passively managed portfolio:
- Implementation of asset allocation recommendations from the financial plan
- Re-balancing at annual review
- Re-balancing required by cash infusion from such events such as:
- Annual IRA or Roth IRA contribution
- Rollover from a 401k, pension, IRA, etc.
- Conversion to a Roth IRA
- Transfer/consolidation from other accounts (savings, brokerage, etc.)
- Gift or inheritance
- Liquidation of cash value life insurance
- Equity pulled out of home from a refinance
- Sale of home
- Etc.
- Re-balancing required by cash withdrawal from such events such as:
- Emergency
- Major purchase (auto, new home, etc.)
- Retirement
- Unemployment
- Child begins college
- Wedding