Fidelity: How to Change Asset Allocation
Asset allocation is a critical aspect of investment planning. It involves dividing your investment portfolio across different asset classes, such as stocks, bonds, and cash, with the goal of achieving a balance between risk and return. Over time, your investment goals, risk tolerance, and market conditions may change, necessitating a shift in your asset allocation. In this article, we will explore how to change asset allocation with Fidelity, one of the leading investment management firms in the world.
Step 1: Evaluate Your Investment Goals and Risk Tolerance
Before making any changes to your asset allocation, it is important to assess your investment goals and risk tolerance. Consider factors such as your time horizon, financial objectives, and comfort level with market fluctuations. This self-evaluation will provide a foundation for determining the appropriate asset allocation for your investment portfolio.
Step 2: Review Your Current Asset Allocation
Next, review your current asset allocation to determine if it aligns with your investment goals and risk tolerance. Fidelity provides account holders with various tools and resources to help analyze their current asset allocation. These tools include portfolio analysis tools, asset allocation models, and risk assessment questionnaires. By evaluating your current allocation, you can identify any areas that need adjustment.
Step 3: Determine Your Desired Asset Allocation
Once you have evaluated your investment goals and current asset allocation, it is time to determine your desired asset allocation. Fidelity offers a range of asset allocation models that can serve as a starting point for creating your own allocation strategy. These models consider different investment objectives, risk tolerance levels, and time horizons. You can choose a model that aligns with your goals or customize it to suit your individual preferences.
Step 4: Implement the Changes
After determining your desired asset allocation, it is time to implement the changes. Fidelity makes this process seamless with their online platform. You can easily reallocate your investments across different asset classes, such as stocks, bonds, and cash, with a few clicks. Fidelity’s platform also allows you to set up automatic rebalancing, ensuring your portfolio stays in line with your desired allocation over time.
Step 5: Monitor and Adjust
Once you have made the changes to your asset allocation, it is essential to monitor your portfolio regularly. Market conditions, economic factors, and personal circumstances may change over time, necessitating adjustments to your allocation. Fidelity provides tools and resources to track and analyze your portfolio’s performance, making it easier to stay on top of your investment strategy.
1. Can I change my asset allocation frequently?
While it is important to review and adjust your asset allocation periodically, frequent changes can undermine your investment strategy. It is recommended to review your allocation at least annually or when significant life events occur.
2. Is there a fee to change my asset allocation with Fidelity?
Fidelity does not charge a fee for changing your asset allocation. However, certain investment products may have associated fees or expenses.
3. How do I determine my risk tolerance?
Fidelity offers risk assessment questionnaires that can help you determine your risk tolerance. These questionnaires evaluate factors such as your investment experience, time horizon, and financial goals.
4. What if I am unsure about my desired asset allocation?
If you are uncertain about your desired asset allocation, Fidelity provides a range of asset allocation models to choose from. These models are designed to match different investment objectives and risk tolerance levels.
5. Can I change my asset allocation for all my Fidelity accounts simultaneously?
Yes, Fidelity allows you to change your asset allocation for all your accounts simultaneously. This can be done through their online platform or by contacting their customer service.
6. Is it possible to automate the asset allocation changes?
Yes, Fidelity’s platform allows you to set up automatic rebalancing to ensure your portfolio stays in line with your desired asset allocation.
7. Can I seek professional advice regarding my asset allocation?
Yes, Fidelity offers access to financial advisors who can provide personalized advice on asset allocation and investment strategy. These advisors can help you make informed decisions based on your individual circumstances and goals.
8. Are there any tax implications when changing asset allocation?
Changing asset allocation within tax-advantaged accounts such as IRAs or 401(k)s typically does not trigger immediate tax consequences. However, changing allocation in taxable accounts may result in capital gains or losses, which can have tax implications.
9. What if market conditions change after I change my asset allocation?
Market conditions are unpredictable, and they can certainly change after you adjust your asset allocation. It is essential to regularly monitor your portfolio’s performance and make adjustments as needed to stay on track with your investment goals.
10. Can I change my asset allocation based on age?
While age is one factor to consider when determining asset allocation, it should not be the sole criterion. Other factors such as risk tolerance, investment goals, and time horizon should also be taken into account.
11. Can I change my asset allocation without selling my existing investments?
In most cases, changing asset allocation involves reallocating your investments. This may require selling some of your existing investments and buying new ones that align with your desired allocation.
12. Can Fidelity help me with asset allocation for retirement planning?
Yes, Fidelity offers retirement planning tools and resources that can help you determine the appropriate asset allocation for your retirement portfolio. They also provide target-date funds specifically designed for retirement planning, which automatically adjust asset allocation based on your expected retirement date.
In conclusion, changing asset allocation is a crucial part of investment management. With Fidelity’s user-friendly platform and comprehensive tools, investors can easily evaluate, adjust, and monitor their asset allocation to align with their goals and risk tolerance. By following the steps outlined in this article and seeking professional advice when needed, investors can make informed decisions to optimize their investment portfolios.