Rebalancing is an important part of portfolio management. If you’re decades away from retirement, there’s no need to panic over a down market. Stocks have a long history of losing value only to rally afterward. But if you’re within a year or two of retirement, a stock market dip or, worse yet, a full-fledged crash could really spoil your plans.
That’s why it’s so important to check on your asset allocation as retirement nears. While it’s certainly not advisable to dump your stocks before retirement, as you’ll need some in your portfolio to continue generating strong returns, you’ll also want more access to safer investments, like bonds, which tend to be far less volatile.
Not only that, but if you’re getting close to retirement, it’s important to keep a chunk of your savings in plain old cash. That way, if stocks tank, you won’t get stuck in a position where you need to liquidate investments at a loss to cover your living costs.
This is exactly why we look at our client’s portfolios each quarter to see if their allocation has changed. By regularly rebalancing we keep our clients within their risk profiles. Often, this allows me to buy quality funds for my clients on sale as well as any fund that pays regular dividends or capital gains buying more shares while the prices are low. Keep in mind, the more shares you have going into retirement, means more income for you once you have reached that milestone.

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