As the markets rise and fall, your portfolio will gradually move away from its target allocation. This is important to note because, as an investor, your investments should be allocated according to your risk tolerance, time horizon, and personal goals.
You may have noticed this year that there has been a significant amount of volatility across various investments and market indexes (such as the S&P 500 and the Dow Jones Industrial Average). In light of these events, it may be a good time to rebalance your portfolio so that it can realign with your investment goals and risk tolerance. This may be especially true if it has been more than a year since you last revisited your asset allocation.
At DirectAdvisors, we will always ask our plan participants about their risk tolerance and time horizon in order to allocate their investments appropriately. Please click on the following link from bankrate.com to read more about the importance of rebalancing your portfolio, if needed: http://www.bankrate.com/finance/retirement/the-right-time-to-rebalance-your-portfolio-1.aspx.