Why it's time to tweak your investments after lofty stock returns in 2024

Published On Jan 3, 2025, 12:44 PM

In 2024, the S&P 500 index saw an impressive gain of 23%, while the tech-heavy Nasdaq increased by 29%. This substantial stock market performance means that many investors may now have portfolios skewed towards stocks compared to their intended allocation, which could increase risk. Financial advisors suggest that investors should consider rebalancing their portfolios to align with their original asset allocation goals, typically around 60% stocks and 40% bonds. Since U.S. bonds offered minimal growth (just 1%), it’s essential to assess overall portfolio risk and make necessary adjustments. The article emphasizes the importance of not only stocks and bonds but also other asset categories within a diversified portfolio. It also suggests careful consideration of tax implications when rebalancing, particularly for taxable accounts.