PRISM: Prioritizing Your Goals

Monitoring Your Allocation 

Reflect  

As we mentioned in the previous lesson, there are three key parts to the portfolio monitoring process:  

• Monitoring your allocation  
• Monitoring the progress toward your goals  
• Monitoring your personal situation for any changes in your life or family status 

In this lesson, we will be going over how to effectively monitor your allocation. When it comes to allocation, the goal is to determine if your portfolio continues to be properly allocated relative to your goals and tolerance for risk. Here is a quick list of action items you can do to effectively monitor your allocation (a printable checklist is linked at the bottom): 

1. Check how your current portfolio's allocation compares against the target allocation you specified in the "Recognizing Your Allocation Worksheet" from Step R. 
2. Since allocations fluctuate over time, we suggest establishing a band in which you allow your allocations to drift within before making any adjustments.
   1. Vanguard has found that allowing portfolio allocations to move within a band of five or 10 percentage points strikes a good balance between maintaining the allocation and not engaging in too many transactions.  
3. If your portfolio has strayed too far from your target, you can bring it back to target by: 

1. 1. Redirecting dividends, distributions and interest payment to the underweighted asset category groups (e.g., small-cap stocks, intermediate-term bonds, etc.).
   2. Pare your overweighted investments to free up dollars to fund withdrawals or direct new portfolio contributions to underweighted investments.
   3. Rebalance your portfolio by selling overweighted positions and reinvesting the proceeds in underweighted positions. 

Participate  

It's time to start filling out the worksheet! Use this worksheet to compare your current portfolio's allocation against the target allocation you listed in Step R of the PRISM process.  

If the difference between your current and target allocation is within your acceptable range of variability, no action is required. However, if your current allocation has strayed too far away from your target allocation, consider rebalancing (either directly or by via future contributions or withdrawals) to adjust your allocation back closer to your target. 

For this lesson, we encourage our members to download the attached worksheet and checklist, as well as answer the discussion question below. 

1. Since starting the PRISM Academy, have you noticed that you need to make adjustments? If so, how do you plan to adjust your allocation so it's aligned with your risk tolerance and goals? 

Now, we want to hear about your findings! Please share your perspectives in the discussion below. 

Download the "Monitoring Your Allocation, Progress and Life Stages" Worksheet 

Questions about coursework, webinars, worksheets, etc.? Drop your inquiries in the discussion below. We're happy to help! 

Monitoring Your Allocation 

Reflect  

As we mentioned in the previous lesson, there are three key parts to the portfolio monitoring process:  

• Monitoring your allocation  
• Monitoring the progress toward your goals  
• Monitoring your personal situation for any changes in your life or family status 

In this lesson, we will be going over how to effectively monitor your allocation. When it comes to allocation, the goal is to determine if your portfolio continues to be properly allocated relative to your goals and tolerance for risk. Here is a quick list of action items you can do to effectively monitor your allocation (a printable checklist is linked at the bottom): 

1. Check how your current portfolio's allocation compares against the target allocation you specified in the "Recognizing Your Allocation Worksheet" from Step R. 
2. Since allocations fluctuate over time, we suggest establishing a band in which you allow your allocations to drift within before making any adjustments.
   1. Vanguard has found that allowing portfolio allocations to move within a band of five or 10 percentage points strikes a good balance between maintaining the allocation and not engaging in too many transactions.  
3. If your portfolio has strayed too far from your target, you can bring it back to target by: 

1. 1. Redirecting dividends, distributions and interest payment to the underweighted asset category groups (e.g., small-cap stocks, intermediate-term bonds, etc.).
   2. Pare your overweighted investments to free up dollars to fund withdrawals or direct new portfolio contributions to underweighted investments.
   3. Rebalance your portfolio by selling overweighted positions and reinvesting the proceeds in underweighted positions. 

Participate  

It's time to start filling out the worksheet! Use this worksheet to compare your current portfolio's allocation against the target allocation you listed in Step R of the PRISM process.  

If the difference between your current and target allocation is within your acceptable range of variability, no action is required. However, if your current allocation has strayed too far away from your target allocation, consider rebalancing (either directly or by via future contributions or withdrawals) to adjust your allocation back closer to your target. 

For this lesson, we encourage our members to download the attached worksheet and checklist, as well as answer the discussion question below. 

1. Since starting the PRISM Academy, have you noticed that you need to make adjustments? If so, how do you plan to adjust your allocation so it's aligned with your risk tolerance and goals? 

Now, we want to hear about your findings! Please share your perspectives in the discussion below. 

Download the "Monitoring Your Allocation, Progress and Life Stages" Worksheet 

Questions about coursework, webinars, worksheets, etc.? Drop your inquiries in the discussion below. We're happy to help!