Despite the passive approach, reallocation of your portfolio remains critically important. Use the following guidelines to help you in assessing your reallocation decisions. Consider changes if:
- A security you bought changes fundamentally in its business or risk characteristics. (i.e. Gillette stops selling razors, and starts selling internet access)
- The percentage composition of individual asset groups in your portfolio become significantly different than what you initially assigned. (i.e. Midcap stocks constitute 320% when they have an
assigned percentage of 20%) A good way to adjust percentages is to use the dividends you receive from your securities.
- Your risk profile (or time frame) changes.
- Your portfolio is significantly underperforming a comparable index. Check out the table at the bottom for major benchmarks to compare your portfolio with. Also compare with our sample portfolios.
This concludes Part IV. of the course! Click here to return to the
maintenance homepage.
If in doubt, leave your portfolio alone!