Rebalancing your portfolio isn’t something
you need to worry about every day. Many financial advisers suggest
that reviewing and reallocating once a year is adequate. Others
suggest that you can ignore imbalances unless the value of any
class exceeds the allocation you originally selected by 15% or
more.
There’s no official timetable for rebalancing,
and the further away your retirement is, the less important frequent
rebalancing is likely to be.
Sometimes your mutual fund or retirement
plan provider will offer a reallocation service, especially if
you invest in a
lifecycle fund.
Those funds may be rebalanced as frequently
as every quarter, which may actually be too often to allow short-term
gains and losses to even out.
You’ll also want to watch the transaction
fees in any automatic plan. Programmed rebalancing generally means
added sales charges.
