How to Rebalance Your Portfolio—and Your Life

Colleen Oakley

Rebalance when your asset allocation gets too skewed. For those who do track their investments often, you could choose to rebalance whenever certain assets in your portfolio have shifted too far from your original allocation. For example, say you want to maintain an allocation of 30% in large-cap stocks and 5% in small-caps, but you’ll accept a deviation of up to 5%. Because of market shifts, a year later that asset makeup has become about 35% in large-caps and almost nothing in small-caps. You could sell off that extra 5% in the large-cap portion, and reinvest that money back into small-caps to go back to your original asset allocation.

Taylor suggests however, that, depending on your financial situation, your threshold for deviation should probably stay around 5% to avoid simply reacting to normal fluctuations caused by the market.

Whichever method you choose, just resist the temptation to set it and forget it. Take a lesson from the recession: The New York Times reports that more than one out of five 401(k) investors aged 56 to 65 had more than 90% of their retirement money in stocks just before the market tanked in 2008. The presumption is that these investors had an allocation presumed to be risky because they didn’t rebalance.

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And remember that your asset allocations still should reflect your comfort with risk. If you’re unsure of the right asset mix for you, talk to your LearnVest Planner about how to weigh each of these approaches as you decide how to rebalance.

2. Your Career

According to a 2013 Gallup poll, about 70% of employees are either not engaged or actively disengaged from their jobs—not the most encouraging statistic for the state of the American workplace. But whether you hate your job, love your job, or are actively on the hunt, it can be a good idea to take a step back once a year and see where you are on your career ladder—and how you can work on improving your position by this time next year. Career coach Dr. Colleen Georges offers some tips:

Learn from your performance review. Typically, no one likes them (really, a recent Kansas State University study found that nearly everyone reacts negatively to criticism during a performance review, even when they love their job). Still, a yearly review can turn into a growth opportunity. “Even if you receive a mostly poor review, don’t dwell on the negative,” says Georges. “Remind yourself of any positive feedback you received, as well as accolades you have gotten from clients and customers, colleagues, or managers in the past.”

Then, ask your supervisor for a new project that will help you strengthen your weak spots. “If your employer sees that you can handle difficult feedback and use it to grow,” says Georges, “you may be likely to gain greater respect and possibly receive a better review the following year. It may also lead to projects with greater responsibility, and ultimately promotions or a better title and salary.”

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