11/01/2026
How do you reduce portfolio risk after a strong market? Start by checking for portfolio drift, because your investments may be riskier than you think.
Drift happens when one part of your portfolio grows faster than the rest. A 60/40 portfolio of stocks and bonds can quietly turn into 75/25 just because stocks outperformed bonds.
That means you could be carrying much more risk than you ever chose.
Rebalancing your portfolio fixes this by trimming what grew too large and adding to what fell behind. A common guideline is to rebalance when an investment drifts about 5% from its target.
The step most investors miss is the order. Rebalance inside your IRA or 401(k) first, since trades in those accounts don’t trigger taxes. Save your taxable brokerage account for last, and use dividends and new contributions to build up what’s underweight instead of selling.
If you haven’t checked your investment mix in six months, there’s a good chance it has drifted.
