Rebalance your 401(K)
A good asset allocation will protect you from market ups and downs, but you still need to keep tabs on that nest egg.
By Ellen McGirt, Fortune senior writer

(Fortune Magazine) -- The "set it and forget it" nature of 401(k)s makes automatic saving easy. Once a year, though, check to make sure that your allocation percentages remain consistent with your overall plan.

The market makes it necessary: Some assets or investments will grow faster than others - energy stocks have soared in recent years, for example - changing the composition of your portfolio. "A good rule of thumb is to rebalance if certain asset classes get more than 10 to 15 percent out of whack," says Bonnie A. Hughes, a financial planner from Kennesaw, Ga.

chart_suggested_allocation.jpg

Rebalancing can also improve your returns - and reduce your risk - by forcing you to cut back on hot-performing assets, which have a way of falling as abruptly as they rose.

But avoid the temptation to make wholesale changes based on your view of the market environment. "You're just chasing performance at that point," says Hughes. Stick to your asset allocation targets. If you aren't happy with them, discuss your goals and risk tolerance with your advisor.

Next steps:

2. Revisit your estate plan

3. Sock it away

4. Give smarter

5. Review your health plan

6. Clean up your taxable account

7. Do a property insurance checkup

8. Check the new credits and taxes

Previous steps:

1. Rebalance your 401(k)

_______________________________

Eight great year-end moves

Help reach your goals with the retirement planner.

Figure out how to invest your retirement money with the asset allocator.

Check in once a year. Surprise: Your 401(k) is one place where you don't want to do much work. Tinker too much and you could end up doing more harm than good. Top of page

YOUR E-MAIL ALERTS
Follow the news that matters to you. Create your own alert to be notified on topics you're interested in.

Or, visit Popular Alerts for suggestions.
Manage alerts | What is this?

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.