How Often Should You Rebalance Your 401(k)?

March 4, 2024

Introduction to Rebalancing your 401(k)

A 401(k) plan is a powerful tool for saving for retirement, allowing employees to contribute a portion of their income to a tax-advantaged investment account. As such it represents an important part of your overall financial and investment planning. As markets fluctuate, so does the composition of your 401(k) investments. This is where the concept of rebalancing your 401(k) comes into play so that your investment allocations stay aligned with your long-term financial goals.

What is 401(k) Rebalancing?

401(k) rebalancing involves adjusting the proportions of different asset classes in your portfolio, such as stocks, bonds, and cash, back to your target allocation. This process is extremely important, because, over time, some investments may outperform others, causing your portfolio to drift from its intended risk level and potential return.

Importance of Rebalancing 401(k) by Cohen Investment Advisors in Bedford, NH

The Importance of Rebalancing Your 401(k)

Rebalancing is pivotal in managing risk and adhering to your investment strategy. Without regular rebalancing, a portfolio may become too aggressive or too conservative compared to your original investment plan, potentially impacting your financial readiness for retirement.

Benefits of Rebalancing Your 401(k)

Battery balancing offers several advantages.:

  • Risk Management – Rebalancing helps keep your portfolio’s risk levels in check, ensuring it remains consistent with your risk tolerance and investment goals.
  • Disciplined Investing – Rebalancing encourages investors to adhere to their strategic plan, rather than reacting impulsively to market volatility.
  • Potential for Improved Returns– By buying low and selling high, you’re systematically locking in gains and reinvesting in undervalued assets, setting the stage for future growth.
  • How Often Should You Rebalance your 401(k)?

    The ideal frequency for rebalancing your 401(k) depends on various factors, including market conditions, your investment strategy, and personal circumstances. A common approach is to review your portfolio annually or semi-annually, with adjustments made as needed to realign with your target allocation. However, some may prefer a more dynamic approach, rebalancing when their portfolio deviates from the target allocation by a certain percentage, such as 5% or 10%.

    Steps to Rebalancing Your 401(k)

  • Review Your Current Allocation – Examine your portfolio to understand how your investments are currently distributed across different asset classes.
  • Compare Against Your Target Allocation – Assess how your current allocation measures up against your intended investment strategy.
  • Make Necessary Adjustments – Sell off investments in over-represented categories and purchase more in under-represented ones to realign your portfolio with your target allocation.
  • Monitor and repeat -Continuously monitor your portfolio and repeat the rebalancing process as per your chosen frequency or whenever significant deviations occur.
  • Why Choose Cohen Investment Advisors in Bedford, NH?

    At Cohen Investment Advisors, we understand the intricacies of 401(k) management and the significance of a well-balanced investment portfolio. Our team of experts is dedicated to guiding you through the rebalancing process so that your retirement savings are strategically positioned to meet your long-term financial objectives. With our personalized approach, we help our clients to easily understand the complexities of 401(k) rebalancing, making it an accessible and straightforward part of your financial planning.


    Rebalancing your 401(k) is a vital component of retirement planning so that your investment strategy remains aligned with your goals and risk tolerance. While the frequency of rebalancing can vary, a regular review of your portfolio is important in maintaining its health and performance. At Cohen Investment Advisors, we are committed to providing you with the expertise and support needed to maximize your 401(k) investments.

    Take control of your retirement planning today. Reach out to Cohen Investment Advisors for personalized advice on how to effectively rebalance your 401(k) and optimize your investment strategy for a secure financial future and a happy retirement.

    Who are We?

    Cohen Investment Advisors, located in Bedford, NH, extends its financial planning services across the U.S. and to several foreign countries. Led by Certified Financial Planner Daniel Cohen, our firm specializes in helping a diverse clientele, including individuals, families, and corporate executives, to manage their finances effectively. Offering guidance on investment strategies, retirement planning, and wealth preservation, our team employs a personalized approach paired with advanced technology to cater to clients both locally and globally. Our firm’s comprehensive services cover various aspects of financial and investment planning such as retirement and investment management, tax optimization, and estate planning, aiming to align strategies with our clients’ life goals. We are committed to delivering expert guidance, personalized solutions, and a partnership that prioritizes our clients’ financial well-being and long-term prosperity. With a mission to positively impact our clients’ financial journeys, we encourage those seeking to secure their financial future to get in touch with us for a consultation.

    For more information about our firm, or to schedule a personal consultation, reach out to us via our website or give us a call at 603-347-8401. We look forward to working with you.

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