Weekend Reading: When Should You Change Your Asset Allocation?

This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
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Weekend Reading

As you invest more money, does your investment strategy need to be more complicated? Not exactly.


Four financial building blocks: As Ben Carlson says, “If anything, the bigger and more complex your finances, the simpler your investments should be.” Regardless of the amount of money you have at stake, four elements are most crucial to implement when it comes to your investment plan: Your risk profile, time horizon, current circumstances and goals. As your net worth grows, these building blocks might shift, but above all, here are specific instances when it might make sense to change your asset allocation, according to Carlson:

📌 When the market changes the opportunity set in a meaningful way: While the economy continues to change, you can either change your expectations with it, or make peace with the trade-offs of more or less risk.

📌 When you picked the wrong portfolio in the first place: Oftentimes, bear markets can be the tell tale sign of whether or not you have the proper amount of risk in your portfolio. As such, dialing back sooner than later is key.

📌 When your circumstances change: A major life event, such as marriage, a new job, receiving an inheritance, etc., all can shift your appetite for how you view risk.

Only make intentional moves: It’s OK if you make asset allocation changes in a bear market, as long as they are intentional and well thought out. Always remember: “There’s an old saying that your portfolio is like a bar of soap. The more you handle it, the smaller it gets.”