Asset Allocation For Dummies®

Chapter 15. Knowing When to Revise Your Plan

In This Chapter

• Revisiting your asset allocation as you move through life

• Keeping tabs on the economy

This book is all about determining and maintaining your long-term, strategic asset allocation. So after you've done all the work necessary to set up your asset allocation, why would you revise it? Simple: Things change. Inevitably, fundamental changes during your lifetime will require you to revisit the assumptions you made when you first set up your allocation.

Some of those changes are gradual and expected, such as aging. Others may be sudden and unexpected, such as job changes, divorce, or economic upheavals. Whatever the cause, sometimes prudence will demand that you take another look at your asset allocation. You may not revise it as a result — you may simply validate your earlier decisions — but it's healthy to periodically raise the question.

Note

We're not talking about market timing here; we never recommend that dangerous investment method. The changes that should prompt you to review (and perhaps revise) your asset allocation have nothing to do with the state of the financial markets themselves. They represent either lasting changes to your lifestyle or fundamental shifts in the overall economy.

In this chapter, we take a look at some of the events that should trigger you to evaluate your asset allocation, so you'll know when it's time to review and decide if some changes are necessary. We also consider the changing investing lives ...