Checklist #21 · Investing
Asset Allocation Rebalancing
Establish a systematic rebalancing process to maintain your target asset allocation and prevent portfolio drift from compounding into excessive risk.
20 action items~15 min to complete3 sections
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Review Current Allocation
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Document your target asset allocation as a specific percentage splitKey
Log in to all investment accounts and calculate current allocation percentagesAction
Identify assets that have drifted more than 5% from target
Compare your current allocation to your risk tolerance today — not just when you set itKey
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5%
Common drift threshold that triggers rebalancing — any asset class beyond target by 5%
+1.5%
Annual return advantage of systematic rebalancing over drift-and-ignore (historical average)
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Execute Efficiently
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Rebalance in tax-advantaged accounts first (401k, IRA) to avoid taxable eventsKey
Use new contributions to buy underweight asset classes instead of sellingAction
In taxable accounts, consider tax-loss harvesting rather than selling gains
Avoid rebalancing during extreme market volatility — act on schedule, not on emotionWatch out
Document every rebalancing action with date and rationale
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Set Your Rebalancing System
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Choose calendar-based or threshold-based rebalancing — commit to one
Set a recurring annual calendar event for portfolio reviewAction
Review target allocation when approaching major life milestones
Consider a target-date fund if manual rebalancing isn't happening
Consider a fee-only advisor for annual rebalancing review if portfolio exceeds $500KAction
Monitor Allocation Drift QuarterlyKey
Coordinate Rebalancing With Tax PlanningAction
Document Rebalancing Policy In WritingKey
Review after major life eventsKey
Schedule routine annual reviewAction
Document designations in estate recordsAction
Confirm update process per institutionAction
Create beneficiary notification instructionsKey
Set calendar reminders for reviewsAction