Reflection No. 42

In partnership with

Happy 4th of July, everyone! Even on a Holiday, there are smart financial moves to be made, but I’ll keep this brief.

Today on Reasoned Reflection we will touch on how financial planning is evolving beyond the old-school playbook, the importance of thinking more and trading less, and a few key things to consider when it comes time to rebalance your portfolio.

Tackle your credit card debt by paying 0% interest until nearly 2027

Reduce interest: 0% intro APR helps lower debt costs.
Stay debt-free: Designed for managing debt, not adding.
Top picks: Expert-selected cards for debt reduction.

Learn How To Apply Now

Three Quick Hits:

• Article: Financial Plans

  Out with the old; in with the new. The traditional 60/40 portfolio split (60% stocks, 40% bonds) has long been the go-to advice for retirement planning. However, for future retirees, that model may not be sufficient. Retirement plans going forward should be built around four key pillars: liquidity, income, growth, and long-term care. 

• Tip: Develop a workable financial plan. A good plan beats a perfect one that never leaves your head. Write it down. Track your progress. And expect adjustments to be needed.

• Quote: “I think investors should think more and trade less.” - Tom Russo

Two Questions:

• If your current financial plan went exactly as designed, where would you be in five years?

• Are you using all the tax-advantaged accounts available to you or leaving money on the table?

REFLECTION No. 42: Rebalancing

I - Issue: How often should you rebalance your investment portfolio to manage risk and stay aligned with your financial goals?

R - Rule: Rebalancing is the process of realigning the weightings of your investment portfolio back to your target asset allocation. While there’s no universally “correct” frequency, common strategies include time-based (e.g., quarterly or annually) and threshold-based (e.g., when allocations deviate by more than 5% from target).

A - Analysis: Markets move constantly, and without rebalancing, a portfolio can drift, which could leave you with more risk (or less growth potential) than you originally intended. For example, if stocks perform well over a year, your portfolio may become too heavily invested in stocks. Rebalancing forces you to sell high and buy low, which supports long-term discipline. That said, frequent rebalancing can lead to higher transaction costs and taxes (for taxable accounts), while infrequent rebalancing can allow risk levels to become significantly skewed. What matters most is choosing a schedule or trigger that you’ll stick to, whether that's rebalancing once a year on your birthday or when any asset class drifts more than 5% from your preferred target.

C - Conclusion: Rebalance your portfolio on a regular schedule (like annually) or when your allocations drift beyond a set threshold. The best approach is the one you’ll follow, keeping your risk level aligned with your goals and your future on track.