Investing isn’t a “set it and forget it” process. Building a portfolio that protects your wealth and aligns with long-term goals is vital, but so is maintaining it. Market shifts, economic cycles, and life changes can pull your portfolio off course. Regular reviews and rebalancing helps keep investments aligned with your objectives, and it’s especially important when assets are complex.
“Rebalancing is essential routine maintenance for your assets,” said Don Heberle, head of PNC Private Bank. “Whether you’re adjusting for risk or refining a growth strategy, an advisor-assisted look at your portfolio is a critical step to ensuring you’re best positioned to meet your goals.”
When reviewing your portfolio, you should consider the following factors:
1. Maintaining desired risk
Every portfolio is built with a target risk profile—often based on factors like age, financial goals, and tolerance for volatility. Over time, market movements can cause certain assets to grow disproportionately, increasing your overall risk. For example, if stocks outperform bonds for an extended period, your portfolio may become more aggressive than intended. Rebalancing restores your original allocation, keeping risk aligned with your comfort level.
2. Locking in gains and controlling losses
Rebalancing isn’t just about risk—it’s also a disciplined way to lock in gains or grow long-term wealth. Selling assets that have appreciated and reinvesting in underweight areas allows you to capture profits while reducing exposure to potential downturns. This systematic approach helps avoid emotional decision-making, which often leads to buying high and selling low.
3. Preventing overexposure to certain asset classes
Markets are cyclical, and no asset class is entirely predictable or will outperform forever. Without rebalancing, you may become too heavily concentrated in one sector or asset type, leaving you vulnerable if that area experiences a decline. Diversification is a good long-term strategy when it’s consistently maintained, and periodic reviews ensure your portfolio remains balanced across multiple asset classes.
4. Supporting long-term strategy over short-term market reactions
Investors often feel tempted to react to headlines or short-term volatility. However, frequent changes to your portfolio driven by short-term emotion can derail your long-term plan. A structured review and rebalancing schedule reinforces discipline, helping you stay focused on your overarching strategy rather than chasing trends or panicking during downturns.
5. Improving potential returns relative to risk
While rebalancing doesn’t guarantee higher returns, it can improve your portfolio’s efficiency, maximizing potential returns for the level of risk you’re willing to take. By keeping allocations in line with your plan, you avoid unintended risk exposure and maintain a portfolio designed to meet your goals.
6. Seeking out the help of an advisor
Portfolio management can be complex, especially when factoring in taxes, changing life circumstances, and evolving market conditions. A trusted financial advisor can provide guidance tailored to your unique situation, helping you determine when and how to rebalance, and ensuring your strategy remains aligned with your objectives.
Consistent portfolio reviews and periodic rebalancing are essential components of successful investing. They help maintain your desired risk level, lock in gains, prevent overexposure, and keep you focused on long-term goals. Whether you prefer to take a more active management role with your investments or lean primarily on the help of an advisor, safeguard your financial future by making a portfolio review a standard practice.
“Your portfolio is dynamic, and like many things in life, will need maintenance to continue serving you over time,” Heberle said. “An advisor-led review schedule is one tool that helps ensure your portfolio is best positioned for long-term success.”
