After having started our journey, it's very likely that we need to adjust our plan as our personal circumstances and our context are going to change.
When we adjust our plan, we will be mainly rebalancing the percentages of shares, bonds and liquidity that we hold (shares mean both individual shares and shares funds, bonds mean both bonds and bund funds), and the action plan according to the new distribution.
When thinking about which events are going to make us adjust it, we can find several types:
change in the income: postive, for example if we have an increase in our salary; or negative, if for example we lose our job.
change in the expenses: positive, like getting rid of a big debt; or negative, like needing to pay a big health bill for medical costs in our family.
special inputs: if we win the lotto, inherited money, or sold a property.
special moments: usually related with external circumstances, like when Mr. Market suffers a crash or a euphoria period, or when the official interest rates sky rocket or plummet.
avaliable benefits: we may have access to special tax benefits.
Aside the previous events, we may think in our age, as times goes by, and our risk tolerance may be less, or we are close enough to our goal and we want to relax our speed. There are several formulas to get the percentage of investments based on our age.
We should be doing this excercise at least once per year. It may be possible that we don't need to rebalance, but still is a good practice to update your journey with your personal circumstances and to your context as soon as there are any important event in your life.
If you are a bit overwelmed about how to rebalance, remember that you can use a snap plan to get this information personalized based on your past and present in #imap.
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