Not Rebalancing Your Portfolio Over Time
In addition to changing your contributions over time, you also have to keep a close eye on your portfolio. The ‘set it and forget it’ method does not work here because different investments grow at different rates over time.
The bottom line is that you should be careful so that your portfolio won’t fall out of alignment with your investing goals.
Let’s say, for example, that technology stocks are having a great year. One strategy would be to sell some of them in order to rebalance your portfolio. That way, you won’t be overexposed to that sector having a bad year later on. So it’s important to think about your strategy and how and when you want to adjust, even if sectors are having good years.
No matter what you decide to do, it’s important to always keep your investment goals in mind.
