How often to rebalance your portfolio


Q. I know we are supposed to rebalance our investments several times a year. How often, and how do we do it?
— Investor

A. There is no absolute rule to rebalancing your portfolio.

It is really based on individual investors, but a good rule of thumb is to rebalance at least twice a year, said Bill Connington of Connington Wealth Management in Fairfield.

He said some investors rebalance quarterly and some do it yearly.

To rebalance, he said, look at your allocations to different areas of the market. Deduct from those that have performed well and have increased to a higher percentage that they are supposed to be, and then use the funds to boost the underrepresented asset classes.

“This will require to you to sell assets and purchase those that you need to maintain your allocations,” Connington said. “If this is done with retirement assets there will be no tax issue, but if done in non-qualified accounts, then you may have some tax issues.”

Consider what the gains or losses would mean to your tax situation before you make any moves.

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