Rebalancing portfolio regularly helps maintain desired asset allocation from "summary" of All About Asset Allocation, Second Edition by Richard Ferri
Regularly rebalancing your portfolio is crucial in ensuring that your desired asset allocation is maintained. This process involves periodically reviewing your investments and making adjustments to bring them back in line with your target allocation. By rebalancing, you are essentially selling assets that have performed well and buying assets that have underperformed, in order to maintain the desired balance between different asset classes. The main goal of rebalancing is to keep your portfolio aligned with your risk tolerance and investment objectives. Over time, the performance of different asset classes can cause your portfolio to drift away from your desired allocation. For example, if stocks have a strong performance, they may come to dominate your portfolio and increase its overall risk level. On the other hand, if bonds underperform, they may make up a smaller portion of your portfolio than intended, redu...
Similar Posts
Learning from failures and setbacks is part of the journey to wealth
Failures and setbacks are inevitable on the path to wealth. They are not signs of weakness or incompetence, but rather opportun...
Saving money is more important than earning money
The idea that saving money is more important than earning money may seem counterintuitive at first. After all, we are often tol...
Stay informed about market trends
To make informed decisions about your mutual fund investments, it is essential to keep yourself updated on the latest market tr...
Understand the risks associated with stock market investments
Stock market investments can offer the potential for significant gains, but it's important to remember that they also come with...
Focus on the big picture rather than shortterm market movements
When it comes to investing, it is crucial to focus on the big picture rather than short-term market movements. This means looki...
Stay informed on global events and their implications
It is crucial to have a keen understanding of global events and their potential repercussions when it comes to making investmen...
Monitoring investment costs is crucial in asset allocation decisions
Keeping a close eye on investment costs is vital when making decisions regarding asset allocation. Costs can eat away at your r...
Control your emotions when making investment decisions
One of the key principles for successful investing is the ability to remain detached and rational when making decisions. This m...
Ultimately, successful investing requires a combination of art and science
Successful investing is not solely a matter of following a set of rigid rules or relying solely on quantitative analysis. While...
Diversify
Diversification is a fundamental principle of investing that can help manage risk and improve returns. By spreading your invest...