As 2025 winds down, here are some moves to help you finish the year strong financially. Morningstar’s director of personal finance and retirement planning, Christine Benz, discusses strategies.
Benefits of Rebalancing Your Portfolio
The main benefit of rebalancing is risk reduction. You trim securities that have performed really well, presumably ones with higher valuations today. And you redirect the money into securities where returns have lagged, but valuations might be more attractive. It’s also important to rebalance on an ongoing basis as you get closer to your spending target.
As retirement approaches, we need to spend that money, so you want to de-risk your portfolio and build safer asset reserves. Investors age 50 and older really need to take notice of rebalancing. It’s time to take some winnings and build safer assets that you could access if you needed to spend from your portfolio. Moving money into high-quality bonds removes risk and takes advantage of current attractive yields.
Why Investors Saving for Retirement Should Check Their International Allocation
They should rebalance as well, but their main consideration should be their U.S. versus non-U.S. exposure. Most investors are under-allocated in international stocks. Consider your style diversification as well, paying attention to underperforming areas.
