I'm sure you've heard of portfolio rebalancing. Almost every investor does it.
It's a simple, but extremely important ‘tool' where an investor periodically buys or sells different assets (stocks, bonds, etc) within a portfolio.
Rebalancing helps reduce the risk an investor suffers from the changes in returns of various investments. And it also helps ‘restore' their desired asset allocatio... ››› more
When you first invest, you should decide on what asset allocation you're going to stick to. For example, what percentage of your portfolio you'll hold in stocks and what percentage you'll hold in bonds.
Over time, the asset allocation of your portfolio will change as their underlying values rise and fall. So every now and then you need to rebalance your portfolio.
But what's the best way to ... ››› more
When it comes to successful investing, you need to have a plan on how you're going to stay in the markets.
To do this effectively, one of the best ways to do it is to have a structured portfolio and regularly rebalance it.
Let's take a closer look at how this works and how it benefits your portfolio…
How to structure your investment portfolio
There are a number of ways you can str... ››› more
Rebalancing is a great way of reducing your investment risk and getting better returns. By keeping your investment portfolio in check and taking it back to your original asset allocation, you can reap the rewards. So if you want to do it, how often should you rebalance your portfolio? And how can you add more money into your investment pot? Read on to find out this and more…
How often to reba... ››› more
Rebalancing is a simple strategy of keeping your assets in certain proportions. Periodically, you check these proportions. If any of these assets stray out of their proportion, you ‘rebalance' them. Rebalancing means you can forget about the daily ups and downs in the market. And your portfolio can benefit. Let's take a closer look at the benefits to your portfolio…
How rebalancing can bene... ››› more
Investors are prone to hanging onto shares and other assets they own. Even if some of your portfolio has performed well, it doesn't mean you should hold on regardless. Sometimes you have to fight your fears and let go. One way to do this is to regularly rebalance your portfolio. By rebalancing, not only can you bank some profits from assets that have done well, but you can invest in others. Let's ... ››› more
The idea of periodically reviewing your portfolio and adjusting your asset allocation back to your initial amounts may make complete sense. It appears to help to reduce risk in your portfolio. But it is worth the hassle? And how often would you need to do it? Read on to find out if rebalancing works…
There are a couple of good studies that suggest rebalancing does work, Phil Oakley in Money We... ››› more
One of the biggest challenges for any investor is to control your emotions. Human beings have a tendency to act in herds. They chase the latest hot investment and sell out of the least popular stuff. In other words, we instinctively buy high and sell low. But this is the exact opposite of what we should be doing. And that's what makes rebalancing a good idea. Let's take a closer look at whether yo... ››› more
Discipline is essential is an essential ingredient to becoming a successful investor. You need to decide on a strategy, allocate your money to your investments accordingly, and then stick with that through the ups and downs the markets will inevitably bring. That doesn't mean you have to be obsessively monitoring your portfolio on a daily basis. But you should review it regularly. And the New Year... ››› more
In theory, rebalancing - buying and selling to get your overall asset pot back to your target allocations - makes a lot of sense. But what about in practice? Some studies show that it might actually be worth it. Read on to find out the pros and cons of rebalancing your portfolio…
Well, there are a couple of studies that suggest that rebalancing works in ‘the real world,’ Phil Oakley in Mon... ››› more
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