Building your portfolio is not a one-off event. Even if all your investments are passive, the portfolio has to be “tweaked” now and again, to compensate for changes in the markets.

Think of it as car servicing: no matter how well the vehicle is built, the repeated bumps in the road mean you need to change the tyres and replace the suspension at some point. This is true even for retirement portfolios, which most people like to leave untouched for too long.

How is rebalancing a portfolio different at retirement?

Many people rebalance their portfolios after the first or second year of retirement. This is because it’s hard to guess how much you’ll need to retire well – some people discover they can live on S$1,500 a month, whereas others may feel they need more.

One of the main differences is that the make-up of the portfolio may be shaken ...