Three Questions to Ask Before You Change Your Portfolio

Three Questions to Ask Before You Change Your Portfolio

When markets move quickly ahead of major events, it's only natural for investors tofeel a strong urge to “do something” with their portfolios. But acting on impulse, without a clear process, can turn a temporary dip into a lasting setback. Before you make any changes, take a moment to pause and consider three essential questions: What has actually changed in my life? Does this change fit my written plan? How will I judge whether the move was successful? Asking yourself these questions helps you shift from reacting to market noise to thoughtfully managing your own financial journey.

1. What has actually changed in my life?

Start by looking at your own life, not the latest headlines. Has your income changed significantly because of a new job, a layoff, retirement, or taking on extra business risks? Have there been changes in your health, family responsibilities, or insurance that could impact your financial stability? Are you facing new or different expenses—like tuition, buying a home, or care giving costs—compared to what you expected when you last reviewed your plan? If you honestly answer “no” to questions like these, your emotions during turbulent markets might be pushing you toward changes you don’t actually need to make.

This question matters because it helps separate what’s just noise from what’s truly important. Markets are often unpredictable and can bounce back faster than we expect, but real-life changes are usually less frequent—and far more significant. By tying your decisions to your actual circumstances instead of headlines, you lower the risk of selling in a panic or chasing the latest market trend.

2. Does this change fit my written plan?

Once you’ve decided something meaningful has truly changed in your life, the next step is to check any investment moves against your written plan. A solid investment policy statement usually spells out your target mix of investments,rebalancing rules, time horizons, and limits on risk, all based on your goals and comfort with loss. The big question to ask: Does this change respect the guidelines you set for yourself, or does it go against them?

For example, if you’re thinking of taking on more risk after a big market rally,are you going beyond the limits you set when you were thinking calmly—not just reacting to recent gains? Or, if you want to pull back after a downturn, are you abandoning a long-term plan that’s meant to weather these storms? A helpful tactic: write down the specific rule from your plan that would justify the change—like, “rebalance if any major asset class is more than 5 percentage points from target.” If you can’t link your action to a rule, it might just be an emotional response, not a thoughtful strategy.

3. How will I judge whether the move was successful?

The last question is all about looking ahead: Before you make a move, decide how you’ll know whether it was the right call—and under what circumstances you’d change course. Clear criteria could include checking in after a set period, monitoring risk (like a maximum loss you’re willing to accept), or comparing results to a benchmark or your original plan. Writing these standards down ahead of time stops you from justifying a bad decision after the fact.

It’s just as important to be clear about when you’d undo the change. If you can’t explain the conditions for reversing your move, you could find yourself chasing performance, making one emotional trade after another. That’s how investors end up drifting away from their original plan—without ever making a single decision that feels obviously “reckless.” Sometimes, after you walk through these questions, you may realize the best move is simply to rebalance according to your rules—selling a bit of what’s done well and buying a bit of what’s lagged—instead of making a major overhaul.

Putting the questions into practice

To make these questions a habit instead of a one-time exercise, try creating a simple checklist to use whenever you’re tempted to make a big change. Write down your answers in a quick note or journal entry—include the date, what you’re considering, and your reasons tied to your life, your plan, and your success criteria. Over time, this record can help you understand your own decision patterns and keep yourself on track with a disciplined approach.

You could also share your checklist with a spouse, partner, or advisor, and agree to talk through any big changes together before taking action. This extra step can help slow down impulsive decisions and reinforce the habit of thinking things through. Many investors find that using this framework leads to less trading and more confidence—even when markets are rough—because they know their choices are grounded in their long-term goals, not short-term emotions.

Disclosure

This material is provided for informational and educational purposes only and does not constitute investment, tax, legal, or other professional advice. It is not an offer to buy or sell any security and should not be relied upon as the sole basis for any investment decision. All investing involves risk, including the possible loss of principal, and past performanceis not indicative of future results. Investors should evaluate their own circumstances and consider consulting with a qualified financial professional before implementing any strategy or making any changes to their portfolio.​

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