Mid-Year Portfolio Rebalancing



With the calendar having just passed the midway point of 2021, now might be an ideal time to review your portfolio, and identify if any rebalancing changes may be necessary to stay consistent with your long-term goals.

Here’s a multi-step guideline that you will find helpful to accomplish this important portfolio management task using Investment Account Manager 3 Individual or Professional.


Step 1: Setting your portfolio allocation targets…

  • select the Portfolio Menu
  • for a listed portfolio, select the Portfolio Allocations tab

Given your goals for growth w/ investment risk, enter your targeted Asset Class percentages (cash v. fixed income v. stocks v. other).  Not sure what allocation is right for you?  Review the asset allocation of target-date mutual funds geared towards individuals in your age range or risk profile and/or visit web sites to complete questionnaires (i.e. Morningstar, Vanguard, Fidelity).

Investment Account Manager 3 also allows you to identify allocation targets for diversifying common stock investments by both sector and by size.  If you’re uncertain on how to set these targets, you might simply use the provided proxy which provides a benchmark for the S&P 500. Select the ‘guidelines’ link to use the allocation percentages of the coinciding exchange traded fund for the S&P 500.

Step 2: Updating portfolio activity…

Once you have defined your portfolio target allocations, you can rely on the many record keeping features provided by Investment Account Manager 3 to update your portfolio activity. These include:

  • updating portfolio activity for purchase, sale and investment income activity, either by downloading automatically from your financial institution, or by manually entering under the Transactions Menu | Add, Edit, Delete transactions.  Update all portfolio activity thru June 2021.
  • updating your stock, mutual fund and exchange traded fund holdings for their asset class allocation characteristics automatically using QuoteMedia (Asset Library Menu | Update data | QuoteMedia) or by manually updating (Asset Library Menu | select a holding | then the Edit tab).
  • updating all holdings for current market pricing data (Tool Bar | Update Prices).

Step 3: Reviewing reports and rebalancing…

After these tasks are completed, use IAM’s Home Page | Allocations tabs to identify your current portfolio allocations and measure these against your portfolio target settings (note: comparisons are also available by selecting the Reports Menu | Portfolio | Allocation Reports).

Once you have reviewed your allocations, you’ll be able to rebalance your portfolio(s) as necessary to better align with your targeted goals.  Prior to doing so, be sure to rely on other features provided by Investment Account Manager so the rebalancing decision is consistent with tax planning goals.

  • review existing holdings, lot by lot, by printing the Short-Term to Long-Term Holdings Audit Report (Reports Menu | Portfolio | Additional Reports).
  • review year-to-date sales activity to identify realized gains/losses by printing the Sold Securities Report (Reports Menu | Portfolio | Sold Securities | Reporting Period: Year to Date).

Step 4: Implement your rebalancing plan… 

Identify where current allocations need trimming; shift/rebalance money from those asset classes, sectors or sizes that exceed your targeted goals, and reinvest into those asset classes, sectors or sizes that are below your targeted goals.

Step 5: Make a habit to periodically rebalance your portfolios…

Set a schedule – 1 or 2x per year.  Ideal times are a mid-year & year-end rebalance, with an eye towards harvesting losses to offset gains elsewhere.  Use these periodic reviews to keep your current allocations in line with your targeted goals.

Portfolio rebalancing helps to reduce chances for disproportionate losses if over concentrated in one asset class, sector or size, and is a cornerstone of good portfolio management.  Investment Account Manager provides the tools for you to implement this ever-important portfolio management function.  And as you rebalance, you effectively buy low and sell high!  Portfolio rebalancing can grow/preserve wealth.