Regularly reviewing and rebalancing your 401(k) portfolio is crucial to ensure that your investments align with your financial goals and risk tolerance. Over time, the performance of different asset classes may vary, causing your portfolio to deviate from your original investment strategy. By reviewing and rebalancing, you can realign your investments to maintain the desired asset allocation and risk level.

It is generally recommended to review your 401(k) portfolio at least once a year. However, certain life events such as a change in financial goals, job switch, or major market movements may warrant more frequent reviews. It’s important to strike a balance between monitoring your portfolio regularly and avoiding excessive tinkering that may be driven by short-term market fluctuations.

Rebalancing your 401(k) portfolio offers several benefits. Firstly, it helps maintain your desired asset allocation, which is essential for managing risk. Secondly, it allows you to take advantage of market movements by selling overperforming assets and buying underperforming ones. Lastly, rebalancing helps you stay disciplined and avoid emotional investment decisions based on short-term market fluctuations.

To determine if your 401(k) portfolio needs rebalancing, you can compare your current asset allocation to your target allocation. If the actual percentages deviate significantly from your target, it may be time to rebalance. Additionally, if a particular asset class has significantly outperformed or underperformed others, it may be necessary to adjust the allocations to maintain the desired balance.

While it is possible to review and rebalance your 401(k) portfolio on your own, some individuals may benefit from seeking professional help. Financial advisors or investment professionals can provide expertise and guidance to ensure that your portfolio aligns with your long-term goals and risk tolerance. They can also help you navigate complex investment strategies and provide an objective perspective during market volatility.