Why Regular Reviews Matter
A portfolio starting at 60% stocks and 40% bonds can drift to 70/30 after a strong equity year. This unintended shift increases risk exposure and potential crash damage. Periodic review catches drift before it becomes dangerous and keeps your portfolio aligned with your risk tolerance.
Review Frequency and Triggers
Most experts recommend reviewing once or twice per year. Too frequent and you incur unnecessary trading costs and taxes; too infrequent and drift accumulates. Choose either calendar-based (every January and July) or threshold-based (when any allocation drifts more than 5%) and stick to the rule.
Three Things to Review
First, allocation: rebalance back to target percentages. Second, costs: if cheaper funds have become available, consider switching. A 0.3% fee difference compounds to about 9% less wealth over 30 years. Third, life changes: marriage, children, job changes, or approaching retirement may require adjusting your target allocation itself. A portfolio management book teaches effective review procedures step by step.