B.A. Schrock Financial Group | Investment Portfolio Review: Rebalancing and Aligning with Retirement Goals
B.A. Schrock Financial Group | Investment Portfolio Review: Rebalancing and Aligning with Retirement Goals

Investment Portfolio Review: Rebalancing and Aligning with Retirement Goals

B.A. Schrock Financial Group | Investment Portfolio Review: Rebalancing and Aligning with Retirement Goals

As you journey toward retirement, your investment portfolio plays a pivotal role in shaping your financial future. Just as a ship’s captain adjusts the sails to navigate changing waters, periodically reviewing and rebalancing your investment portfolio is essential for staying on course to meet your retirement goals. Below, we’ll explore the importance of conducting a regular investment portfolio review, the process of rebalancing, and how to align your portfolio with your retirement aspirations.

First: Why an Investment Portfolio Review Matters

Your investment portfolio is a dynamic entity that evolves with market fluctuations, changes in your personal circumstances, and shifts in your retirement timeline. Regular portfolio review helps ensure that your investments remain in line with your risk tolerance, goals, and financial objectives. Here’s why it matters:

1. Maintaining Asset Allocation

Over time, certain assets may outperform others, causing your portfolio’s allocation to deviate from your original plan. That’s why you can’t just “set and forget” your portfolio. A regular investment portfolio review process allows you to realign your investments and maintain your desired asset allocation.

2. Managing Risk

Market conditions can change unexpectedly, which can impact the risk profile of your portfolio. By reviewing and adjusting your investments, you can manage risk and minimize potential losses.

3. Capitalizing on Opportunities

As economic and market landscapes evolve, new investment opportunities arise. An investment portfolio review helps you remain positioned to take advantage of these opportunities when they align with your goals.

The Rebalancing Process

Rebalancing your portfolio involves adjusting your investment holdings to bring your portfolio back to its target allocation. Here’s how to approach the process:

1. Review Your Current Allocation

Start by assessing your portfolio’s current asset allocation and compare it to your target allocation. Determine the extent to which your investments have deviated from your intended mix.

2. Identify Rebalancing Opportunities

Identify asset classes or investments that have become overrepresented or underrepresented due to market movements. These are the areas where rebalancing is needed.

3. Determine Rebalancing Strategy

Choose a rebalancing strategy that suits your preferences. You can opt for a time-based approach (e.g., rebalance annually or semi-annually) or a threshold-based approach (e.g., rebalance when an asset class deviates by a certain percentage).

4. Execute Rebalancing Transactions

Implement the necessary transactions to bring your portfolio back to its target allocation. This may involve selling overrepresented assets and buying underrepresented ones.

5. Consider Tax Implications

Be mindful of tax consequences when rebalancing. Selling investments may trigger capital gains taxes, so it’s important to evaluate the tax impact before making changes. You may want to work with a tax advisor or financial advisor during tis part of the investment portfolio review process.

Aligning Your Portfolio with Retirement Goals

As you approach retirement, your investment strategy may shift to prioritize capital preservation and income generation. Here’s how to align your portfolio with your retirement goals:

1. Define Retirement Objectives

Clarify your retirement objectives—whether it’s maintaining your lifestyle, funding travel, or leaving a legacy. Your investment strategy should reflect these goals.

2. Emphasize Diversification

Diversification becomes even more critical as you near retirement. Spread your investments across different asset classes to manage risk and capture potential gains.

3. Focus on Income Streams

Consider allocating a portion of your portfolio to income-generating investments such as dividend-paying stocks, bonds, and annuities to provide a consistent income stream during retirement.

4. Reevaluate Risk Tolerance

Your risk tolerance may change as you transition into retirement. Ensure that your portfolio’s risk level aligns with your comfort level and the income you’ll need in retirement.

5. Plan for Withdrawals

Develop a strategy for drawing down your portfolio during retirement. Determine a sustainable withdrawal rate that balances your income needs with the longevity of your savings.

Consulting a Financial Advisor to Assist with Your Investment Portfolio Review

Navigating the complexities of an investment portfolio review, rebalancing, and retirement planning can be daunting. If you felt confused or overwhelmed by any of the guidance above, you’re not alone! A qualified financial advisor can provide expert guidance, help you create a personalized investment strategy, and ensure that your portfolio remains aligned with your retirement goals.

If you’re ready to work alongside a professional team to conduct an investment portfolio review and rebalance your portfolio to align with your retirement goals, we’re here to assist. At B.A. Schrock Financial Group, we can help you regularly assess your portfolio’s performance, making necessary adjustments to help you enhance your financial well-being and confidently set sail toward a secure and fulfilling retirement. Contact us today to schedule an initial conversation!

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B.A. Schrock Financial Group | Investment Portfolio Review: Rebalancing and Aligning with Retirement Goals

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