David Snowball, founder of MutualFundObserver.com, once told me that there are three sorts of reasons why investors adjust their portfolio: “Strategic, structural and stupid.”
Structure has to do with the specific investment you are buying and whether something has changed there; stupid reasons revolve around emotion and flawed thinking. The strategic reasons to make a change typically revolve around life circumstances. If you have lost a job or things get iffy at work, if your child’s first tuition payment is imminent, if you retire or you win the lottery or inherit a pile of money, if you change financial goals because there are grandchildren, life events need to be factored into your plan.
Until you review life changes as they relate to your finances and make structural adjustments so that the plan you are following is a reflection of your hopes and dreams now, you can’t have complete confidence needed to remain calm and carry on. Check that you actually are following the plan. If there is something besides the daily market action that is making you nervous, it may be that something feels off.
Rebalance your investments so they are in line with the program. If you set up a 60-40 stocks-to-bonds portfolio 15 years ago and just let things ride, your asset allocation is likely closer to 80% stocks by now, simply because market returns have been so much greater than bond results.