Avoid “All-or-Nothing” Moves: A More Human Approach to New Year Investing

Avoiding “all-or-nothing” decisions at the start of the year can help reduce risk, avoid unnecessary taxes and trading costs, and support more consistent long‑term investment results. Instead of making big, dramatic changes, a rules‑based rebalancing process offers a steadier and less stressful way to adjust your portfolio than swinging between 100% cash or 100% aggressive investments.​

Common New Year mistakes

It’s common to feel pressure to “start fresh” in January and make big changes to your investments because of recent market ups and downs, or the latest headlines. But acting on these feelings can lead to emotional decisions, instead of a thoughtful plan that fits your goals, time horizon, and comfort with risk.​

Two frequent early‑year patterns are:

• Moving everything to cash after a tough year, hoping to “wait until things feel safer.” This move can lock in losses and makes it easy to miss out when the market recovers.​
• Going all-in on aggressive investments (like putting everything in stocks or speculative assets) after a great year because of overconfidence or fear of missing out.​

Why “all‑cash” can backfire

Putting all your money in cash might feel like the safe choice, but it comes with some hidden risks.

• Market‑timing risk: The market’s best days often come without warning, so being in cash at the wrong time can seriously hurt your long‑term returns.​
• Inflation and opportunity cost: Cash usually earns less than a diversified portfolio, and over time, inflation can eat away at its value.​

Why “all‑aggressive” is dangerous

On the flip side, going “all‑in” on aggressive investments can mean taking on more risk than you can actually handle.

• Drawdown and behavior risk: Big losses can lead to panic selling, which usually happens at the worst possible time.
• Concentration risk: Putting too much into one type of investment or theme means you’re less diversified, so a bad surprise in that area can hurt more.

A rules‑based way to adjust

A steadier approach is to set some ground rules for how you adjust your investments, instead of reacting to your emotions or the latest news.​

Examples of rules‑based practices include:

• Time‑based rebalancing: Review and rebalance the portfolio on a set schedule (for example, every 6–12 months) to bring allocations back toward targets.​
• Threshold‑based rebalancing: Only make changes when an asset class drifts beyond a set band (for example, more than 5 percentage points from its target), which can help control trading and taxes.​
• Policy ranges and risk guardrails: Define minimum and maximum ranges for major asset classes—such as equity, fixed income, and cash—so that even tactical shifts stay within a disciplined risk framework.​

Practical early‑year checklist

A good way to start the year is to focus on your process, not trying to predict what the market will do next.

• Take a moment to revisit your goals, timeline, and comfort with risk. Make sure your overall investment plan still fits your life before making any changes.​
• Check if your current investments match your targets, and rebalance in a way that considers taxes, costs, and whether you’ll need access to your money soon.​
• If you do decide to make a small shift (like a bit more or less in stocks), write down why you’re doing it, how much you’re changing, and when you’ll switch back. This helps you avoid open‑ended bets that can get away from you.​

Disclosure

This material is provided for informational and educational purposes only and is not intended as, and should not be construed as, individualized investment advice, an offer to sell, or a solicitation of an offer to buy any security or investment strategy. The information herein is impersonal and does not take into account the specific investment objectives, financial situation, or particular needs of any specific person. Investors should consult with a qualified financial professional, and, where appropriate, a tax or legal advisor, before making any investment or financial decisions.​

Investing involves risk, including possible loss of principal. Past performance is not indicative of, nor does it guarantee, future results. Diversification and asset allocation do not ensure a profit or protect against loss in declining markets. References to specific strategies or asset classes are for illustrative purposes only and do not constitute a recommendation or endorsement of any security, strategy, or allocation.​

This article is not intended to describe the services of any particular investment adviser or to advertise or promote advisory services, and it does not include testimonials, past‑specific recommendations, or projected performance. The content is designed to be consistent with general SEC guidance that impersonal educational publications may be provided without tailoring to any individual investor when they avoid specific buy/sell recommendations and promotional content. Regulatory requirements and interpretations may change, and readers should consult compliance professionals regarding the application of federal and state securities laws to their own communications.​

Sources

• SEC Investor.gov – “Is It Time to Rebalance Your Investment Portfolio?”
  https://www.investor.gov/additional-resources/spotlight/directors-take/rebalancing-your-investment-portfolio​
• Liberty Group – “How to Rebalance Your Portfolio for the Second Half of the Year”
  https://www.libertygroupllc.com/how-to-rebalance-your-portfolio-for-the-second-half-of-the-year/​
• Russell Investments – “Behavioral Mistakes: How Much Value Comes From Prevention?”
  https://russellinvestments.com/us/blog/b-is-for-behavioral-mistakes-how-much-value-comes-from-prevention​
• Understanding the SEC Newsletter Exemption
  https://www.riacc.io/single-post/understanding-the-sec-newsletter-exemption-what-rias-need-to-know​
• Behavioral finance discussion of common investor errors
  https://schweizerfinanzblog.ch/en/behavioral-finance-how-to-avoid-the-13-biggest-investment-mistakes/​
• Behavioral finance resolutions and emotion in investing
  https://www.stordahlcap.com/insights/five-behavioral-finance-resolutions-for-a-better-financial-year​

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