• Open an Account
  • ATM / Branch
Citi logo Citi logo
  • Overview
  • Market Commentary
    • Overview
    • Family & Money
    • Insurance & Long-Term Care
    • Investing
    • Personal Finance
    • Retirement
    • Trust & Estate
  • Global Perspectives
  • Wharton Knowledge
  • Election 2020
  • Call Financial Advisor: 9am–7pm ET (M–F)
    1-877-357-3399
  • TTY: 1-800-788-6775
  • Sign on to Schedule Appointment
    • Sign On to Citi Personal Wealth Management
    • Banking
    • Credit Cards
    • Investing
    • Lending
    • Citigold®
    • Citigold® Private Client

Citi Personal Wealth Management

Giving Your Money a Checkup:
Has Your Portfolio Lost
Its "Balance"?

Home › Financial Guidance › Investing

The following content is complex, and you should consult an expert about this topic.

A few years ago, you might have been comfortable with your mix of investments. That does not mean you should still be comfortable today, particularly with the impact of the pandemic on the markets.

The fact is, even if you haven't made any trades, and even if your appetite for risk hasn't changed, there is a good chance your portfolio looks quite different from the investment mix you bought a few years ago, or even just a few months ago. The reason: As some investments may have soared and others may have slumped, you could find you now have far more invested in some asset classes than you intended and far less in others.

What to do? It may be time to rebalance.

Staying on Target

When you first built your portfolio, you might have settled on target percentages for each asset class. Let's assume you started with a balanced portfolio consisting of 60% stocks and 40% bonds.

The stock market then tumbles 20%, while bonds rise 5%. Not only would your portfolio's overall value slip 10%, but also your stocks would be down to 53% of your investment mix. To rebalance your portfolio, you would need to shift money into stocks to get back up to 60%. If stocks continued to decline, that would hurt returns. But if stocks rebounded, you would likely benefit, because you would then have more invested in stocks.

But rebalancing should be viewed primarily as a way of managing your risk. If you didn't rebalance during a rising stock market, you would likely find that more and more of your portfolio was invested in stocks and you could get hit especially hard when the next bear market strikes.

You might also rebalance within your stock–market investments and within your bond–market investments. Imagine that you had initially split your stock portfolio between 70% U.S shares and 30% foreign companies. To maintain those targets, you might add to U.S stocks when they're suffering and trim back your foreign stocks when they have had a stretch of stronger performance.

This, again, should primarily be viewed as a way of managing risk. Still, unlike rebalancing between stocks and bonds, rebalancing within your stock portfolio and within your bond portfolio may be less likely to hurt returns—and it might help.

Take the strategy of rebalancing between U.S. and foreign stocks for example. If you regularly add to the stocks that are lagging and lighten up on the stocks that are faring well, you might find yourself buying low and selling high. Assuming U.S and foreign stocks generate similar long–term results, this buy low–sell high strategy may enhance your returns over the long haul—although, of course, there are no guarantees.

A few years ago, you might have been comfortable with your mix of investments. That does not mean you should still be comfortable today, particularly with the impact of the pandemic on the markets.

Bucking the Trend

Be warned: While rebalancing may sound easy, it can be mighty tough in practice. You need a strong stomach to buy into depressed markets that other investors are fleeing. That's why it is important to think carefully about your target portfolio percentages—and whether you will be able to live with them in good times and bad.

How often should you rebalance? This is a matter of some debate. Some people like to keep it simple, rebalancing once a year or once a quarter.

Others look to rebalance only when their investments are significantly above or below their target percentages. For instance, if you have 20% of your overall portfolio earmarked for foreign stocks, you might only rebalance if their value rises above 25% of your portfolio or falls below 15%.

Beware of the risks of holding all your eggs in one basket. There's always the risk that a company falls in value-and potentially faces bankruptcy. Recent examples include JC Penney, Hertz, and GNC to name a few. Rebalancing may make more sense with diversified investments, such as mutual funds and exchange–traded index funds. Such investments may help prevent catastrophic losses from concentrated holdings through the power of diversification.

As you contemplate tweaking your portfolio, also give some thought to trading costs, which will eat into any gain from rebalancing. If your investment trading costs are high, you may want to rebalance less frequently.

Taxes are another cost you may want to consider. While rebalancing within a retirement account — shifting from one investment to another — doesn't trigger any immediate taxes, selling in a taxable account could unleash a big tax bill.* Indeed, if you need to rebalance within your taxable account, you may want to try to avoid selling investments with large capital gains.

Instead, to get your portfolio back into balance, consider directing any dividends, interest and new savings into those asset classes that have fallen below your target percentages.


See More Content

Use the filters below to see more market commentary, useful webcasts and financial guidance content.

articles found

Video of Shawn Snyder offering his insights on investing in a post-COVID global economy

2021 Outlook - A New Beginning: Investing in a Post-COVID World

Shawn Snyder, Head of Investment Strategy, Citi Personal Wealth Management, and Juan Arana, Head of the Citi International Personal Bank U.S. Investment Lab, offer their insights on investing in a post-COVID global economy.

Video (61:27)

Video of Shawn Snyder discussing the election and potential policy implications

Washington Watch: The Potential Impact of the Election

Shawn Snyder, Head of Investment Strategy, Citi Personal Wealth Management, and Bill Rys, Managing Director of Federal Government Affairs, Citigroup, share their thoughts on what the results of the U.S. election mean for financial markets, the economy, and your personal finances.

Video (57:00)

Video of Shawn Snyder discussing the election and potential policy implications

Washington Watch: The Path to the Presidency Webcast

Shawn Snyder, Head of Investment Strategy, Citi Personal Wealth Management, and Bill Rys, Managing Director of Federal Government Affairs, Citigroup, share their thoughts on the potential policy implications.

Video (68:00)

Video of Shawn Snyder discussing how to invest in this new economic cycle

Mid-Year Outlook 2020 Webcast

Shawn Snyder, Head of Investment Strategy, Citi Personal Wealth Management, discusses how to invest in this new economic cycle with Steven Wieting, Citi Private Bank’s Chief Investment Strategist and Chief Economist.

Video (59.19)

Explore Citi Benefits

Market Insights are only one of the many benefits you get as a client.

Item 1 through 3 of 6
  • someone touching a tablet with their finger

    Personalized Financial Guidance

    Collaborate with your dedicated team to create a personalized financial plan around your life’s “what ifs” using Citi Wealth Advisor, Citi Personal Wealth Management’s digital financial planning solution.

    Learn More on Personalized Financial Guidance

  • man and woman on couch looking at tablet

    Ways to Invest

    Citi offers a range of investment and insurance products and services that can help you work toward your financial goals. These products include individual stocks, fixed income and mutual funds, as well as more sophisticated offerings like alternative investments and structured products.

    Learn More on Ways to Invest

  • screenshot of mobile phone displaying charts

    World-class Investment Capabilities

    Gain access to Citi Personal Wealth Management’s world-class investment platform, including a breadth of product choices and research from hundreds of analysts globally.

    Learn More on World-class Investment Capabilities

Contact Us


Find a Citi Personal Wealth Management
Financial Advisor

Call: 1-877-357-3399 | 9am – 7pm ET (M–F)

Investment Services: 8am – 9pm ET (M–F) | 9am – 7pm ET (Sat)

Locate an Advisor

Contact your Dedicated Team

Call: 1-800-321-2484 | TTY 1-800-788-6775
or Sign on to schedule an appointment.

Logo: Citi - Welcome what's next
INVESTMENT AND INSURANCE PRODUCTS: NOT INSURED BY THE FDIC • NOT INSURED BY THE FEDERAL GOVERNMENT OR ANY OTHER FEDERAL GOVERNMENT AGENCY, BY THE BANK, OR BY ANY AFFILIATE OF THE BANK • NOT A DEPOSIT OR OTHER OBLIGATION OF, OR GUARANTEED BY, THE BANK OR AN AFFILIATE OF THE BANK • SUBJECT TO INVESTMENT RISK, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL INVESTED
Citi logo

Important Information

The market and planning commentary on this site may discuss topics that are timely to current events at the time they were written or filmed. The relevance of such topics may change at future dates.

Diversification and asset allocation do not protect against loss or guarantee a profit.

Please consult your Financial Advisor before making any investment decisions.

*Withdrawals from a Roth IRA and Roth 401(k) are tax–free provided they meet certain qualifications and requirements. Before you make any withdrawals, please speak with your tax advisor.

The above content is for informational purposes only and contains a summary of the topic and is not intended to be a comprehensive discussion, including any legal or tax ramifications of the strategies or concepts described herein. These strategies are not guaranteed to succeed or indicate future performance, and they do not necessarily represent the experience of other clients.

This is not an offer to buy or sell any of the securities, insurance products, investments, or other products named.

Citigroup Inc. and its affiliates do not provide tax or legal advice. To the extent that this material or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

Citi Personal Wealth Management is a business of Citigroup Inc., which offers investment products through Citigroup Global Markets Inc. (”CGMI”), member SIPC. Citigroup Life Agency LLC (“CLA”) offers insurance products. In California, CLA does business as Citigroup Life Insurance Agency, LLC (license number 0G56746). Citibank, CGMI, and CLA are affiliated companies under the common control of Citigroup Inc.

©2021 Citigroup Inc. Citi, Citi and Arc Design and other marks used herein are service marks of Citigroup Inc. or its affiliates, used and registered throughout the world. 8/20

Privacy | Notice at Collection | CA Privacy Hub