Midyear Financial Checkup: Essential Steps for 2025

Adjusting Financial Goals Based on Performance and Life Changes 

Your financial plan should evolve as your life circumstances change and as you gain clarity about what's most important to you. Review how your investments have performed relative to your expectations and benchmarks. If performance has been stronger than anticipated, you might be ahead of schedule for certain goals. Conversely, if returns have been disappointing, you may need to adjust savings rates or timelines. 

Midyear is an excellent time to evaluate whether significant life changes warrant adjustments to your financial strategy. Some things to consider include career developments or job changes; family changes like marriages, births, or children leaving home; health considerations or insurance needs; real estate purchases or moves; inheritance or unexpected windfalls 

Along the same lines, adjusting your finances also requires a look at your goals. Life is about tradeoffs, and your financial plan should reflect your current priorities. Regular reviews ensure your money is working toward what matters most to you now, not six months, one year, or three years ago. 

Tax planning is another big reason why a mid-year financial review is so critical. With potential TCJA changes looming, tax planning has become more important than ever. You should also Review your taxable accounts for opportunities for “tax loss harvesting,” which is a strategy that allows you to realize losses in order to offset gains and reduce tax liability. You may also want to consider bunching charitable contributions to maximize itemized deductions or using appreciated securities to avoid capital gains. 

Finally, revisit and review your retirement accounts. With uncertainty about future tax rates, converting traditional IRA funds to Roth IRAs while rates remain relatively low could provide long-term benefits.  

read more below

Finding Your Optimal Asset Allocation 

Your asset allocation—the mix of stocks, bonds, and other investments—is an important determinant of your long-term investment returns. While rules of thumb provide a starting point, your optimal allocation should consider multiple factors: 

• Risk tolerance: How would you feel if your portfolio dropped 20% in a year? 
• Time horizon: When do you need to access these funds? 
• Income stability: Is your job secure, or do you need more conservative investments? 
• Goals and priorities: Are you saving for retirement, college, or other specific objectives? 

Your strategic allocation is your long-term target based on your fundamental circumstances, while tactical allocation involves making short-term adjustments based on market conditions. 

Why Portfolio Rebalancing Matters More Than Ever 

Portfolio rebalancing involves periodically adjusting your portfolio back to your target asset allocation by selling investments that have performed well and buying those that have underperformed. This disciplined approach forces you to "sell high and buy low"—the golden rule of investing. 

The first half of 2025 has brought unique challenges with ongoing discussions about Tax Cuts and Jobs Act (TCJA) provisions set to expire at year-end, Federal Reserve policy adjustments, and geopolitical uncertainties. Maintaining proper portfolio balance has become more critical than ever. 

Why Rebalancing Works 

When one asset class significantly outperforms others, it becomes a larger percentage of your portfolio than originally intended, potentially exposing you to more risk than you're comfortable with. For example, if stocks have performed exceptionally well, they might now represent 80% of your portfolio instead of your target 60%. Rebalancing would involve selling some stocks and purchasing bonds to return to your strategic allocation. 

Rebalancing requires discipline because it often feels counterintuitive—it's human nature to want to hold onto winning investments. However, this emotional approach often leads to buying high and selling low. 

Moving Forward with Confidence 

A thorough midyear financial checkup provides the foundation for making informed decisions during the second half of 2025. By rebalancing your portfolio, optimizing your asset allocation, and adjusting your goals based on current circumstances, you can enter the remainder of the year with confidence. 

Remember, successful financial planning isn't about perfection—it's about making consistent, strategic adjustments that keep you moving toward your long-term objectives. 

At WHZ Strategic Wealth Advisors, our "Plan Well. Invest Well. Live Well.™" process includes regular portfolio reviews and strategic adjustments to keep you on track toward your goals. We're committed to being your partner every step of the way – that’s how we work to deliver on our promise to help provide you with “Absolute Confidence. Unwavering Partnership. For Life.” Contact us for a complimentary consultation at whzwealth.com or call (860) 928-2341.    

Authored by WHZ Partner, Advisory Leisl L. Langevin CFP® CDFA®. AI may have been used in the research and initial drafting of this piece. Rebalancing does not assure a profit or protect against loss in declining markets and cannot guarantee that any objective or goal will be achieved. Investments are subject to risk, including the loss of principal. Past performance is no guarantee of future results. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. 697 Pomfret Street, Pomfret Center, CT 06259 and 392-A Merrow Road, Tolland, CT 06084, 860.928.2341. http://www.whzwealth.com. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your financial advisor. WHZ Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice.