As your life circumstances change, so should your asset allocation. Reviewing your asset allocation on a regular basis helps ensure that your investments are still aligned with your goals and risk tolerance, says AG Morgan Financial Advisors who are experts at suggesting excellent financial investment programs.
While there’s no perfect frequency for reviewing your asset allocation, most experts recommend doing so at least once per year. And if you experience a major life event – such as getting married, having a child, or changing jobs – it’s a good idea to revisit your asset allocation sooner rather than later.
Read on to learn more about how and why to review your asset allocation. We’ll also provide some tips on what to do if you find that your current asset allocation is no longer right for you.
Why You Should Review Your Asset Allocation
There are a few key reasons why it’s important to review your asset allocation on a regular basis:
- Your goals may have changed. As you move through different stages of life, your financial goals are likely to change as well. For example, when you’re in your 20s and 30s, you may be focused on building up your retirement savings. But once you reach your 40s or 50s, you may start thinking more about funding your child’s education.
- Your risk tolerance may have changed. Over time, your attitude towards risk is likely to shift. For instance, you may be more willing to take risks when you’re younger and have more time to recover from any losses. But as you get older, you may become more risk-averse as you move closer to retirement.
- Your investments may have changed. Even if your goals and risk tolerance remain the same, the actual investments in your portfolio may have changed. This can happen for a variety of reasons, such as companies being bought out or merged or stocks simply going up or down in value over time.
How to Review Your Asset Allocation
There are a few different approaches you can take when reviewing your asset allocation:
- Do it yourself. If you’re comfortable managing your own investments, you can review your asset allocation on your own. Simply log into your investment accounts and take a look at how your money is currently allocated across different asset classes.
- Hire a professional. If you’re not sure where to start, or if you don’t have the time to review your investments yourself, you may want to hire a financial advisor. A professional can help you assess your current asset allocation and make recommendations for changes if needed.
- Use a tool. There are a number of online tools that can help you review your asset allocation. For example, Vanguard’s Asset Allocation Evaluator can help you see how your current portfolio aligns with your goals and risk tolerance.
Endnote:
So, there you have it – a guide to reviewing your asset allocation. Remember, there’s no perfect frequency for doing so. But most experts recommend checking in at least once per year. And if you experience a major life event, it’s a good idea to revisit your asset allocation sooner rather than later.
