Life Changes
It’s important to reassess your original allocations if your personal circumstances change: for example, if you become divorced, widowed, remarried, have more children than you planned, or lose your job. To respond to these situations, you may need to liquidate some of your investment portfolio for emergency cash.
You may also find yourself falling short of your goals and need to invest more aggressively to catch up. This may require increasing your stock allocation to better position your portfolio for increased growth opportunities.
Or, as you grow older and approach retirement, you may wish to design a more conservative portfolio in order to protect your investment earnings. This scenario may call for a lower allocation of stocks and an increase in bond and cash holdings.