Selecting your asset allocation is one of the initial steps you\u2019ll complete when enrolling in your 401(k) plan. You may decide to place a percentage of your money into high-risk mutual funds and a certain percentage into lower-risk investments like bond funds.<\/p>\n\n\n\n
However, as time passes by and your retirement goals evolve, you may decide you want to make changes to your asset allocation. We\u2019re breaking down everything you need to know to understand what account rebalancing is and how it works.<\/p>\n\n\n\n
Rebalancing your 401(k) account refers to buying and selling assets to maintain the original percentage distribution of your asset allocation. Some plan participants choose to rebalance on a set schedule to avoid additional anxiety. Working collaboratively with a financial advisor can help you relieve the stress related to account rebalancing.<\/p>\n\n\n\n
When you first enroll in your employer-sponsored 401(k) account, you may choose to allocate a certain percentage of your contributions to different types of investments based on risk and return considerations. As time passes, you may find that you have significantly more or less money in one type of investment because of market fluctuations.<\/p>\n\n\n\n
With the ever-changing market, you may decide that your portfolio needs an adjustment. This is where rebalancing your 401(k) account comes in.<\/p>\n\n\n\n
If you want to maintain the percentage allocation of your account, a financial advisor may recommend rebalancing it.<\/p>\n\n\n\n
The remedy for an out-of-balance portfolio is as simple as buying or selling some of your investments to even out the allocation percentages of your account. With the ePlan Services participant dashboard, you\u2019ll be able to view your asset allocation and gain access to the asset allocation planner, so you can keep your 401(k) account on track.<\/p>\n\n\n\n
Because you’re selling your own investments and buying new ones, you don\u2019t need to worry about additional costs. No-fee investments may also help you avoid losing any of your own money in the process. If you have a target-date fund that automatically rebalances, then you may not need to rebalance your account yourself.<\/p>\n\n\n\n
Whether your investment strategy is aggressive or conservative, it\u2019s important to check your account periodically to understand your portfolio performance and rebalance when necessary. A knowledgeable financial advisor can be of assistance when making decisions about your asset allocation.<\/p>\n\n\n\n
If you have questions about rebalancing your investment portfolio, ePlan Services has answers. Visit our Help Center<\/a> today for more information and log in to your employee dashboard to review your own asset allocations.<\/p>\n\n\n\n\n