How can you adjust your asset allocation over time?

2 Review periodically

Once you have a target asset allocation, you should review it periodically to see if it still matches your needs and expectations. You can do this at least once a year, or more frequently if there are significant changes in your life or the market. For example, you may want to adjust your asset allocation if you experience a major life event, such as marriage, divorce, retirement, or inheritance. You may also want to adjust your asset allocation if the market conditions change dramatically, such as during a recession, a boom, or a crisis.

4 Adjust gradually

Adjusting your asset allocation over time does not mean that you have to make drastic changes to your portfolio. You can adjust your asset allocation gradually and incrementally, depending on your situation and preferences. For example, you can use a glide path approach, which is a predetermined plan that gradually shifts your asset allocation from more aggressive to more conservative as you approach a specific goal, such as retirement. You can also use a dynamic approach, which adjusts your asset allocation based on market signals and trends, such as momentum, volatility, or valuation.

5 Diversify wisely

Diversifying your portfolio across different asset classes, sectors, regions, and styles can help you reduce your risk and enhance your return potential. However, diversification does not mean that you have to own every asset available. You should diversify wisely and selectively, based on your research and analysis. You should also avoid over-diversifying or under-diversifying your portfolio, as both can hurt your performance and increase your costs. You should aim for an optimal level of diversification that reflects your objectives and constraints.

6 Seek professional help

Adjusting your asset allocation over time can be a complex and challenging task, especially if you are not confident or experienced in investing. You may benefit from seeking professional help from a financial advisor, a robo-advisor, or a portfolio manager. These experts can help you design, implement, monitor, and modify your asset allocation strategy, based on your goals, risk tolerance, time horizon, and market conditions. They can also provide you with guidance, advice, and support throughout your investment journey.