Stick to your asset allocation from "summary" of The Bogleheads' Guide to Investing by Taylor Larimore,Mel Lindauer,Michael LeBoeuf
Maintaining your asset allocation is crucial for long-term investment success. This allocation determines the percentage of your portfolio that you have invested in different asset classes, such as stocks, bonds, and cash. While it can be tempting to try to time the market or chase hot investment trends, deviating from your asset allocation can have negative consequences. The purpose of asset allocation is to create a diversified portfolio that balances risk and return based on your financial goals and risk tolerance. By spreading your investments across different asset classes, you reduce the impact of market volatility on your overall portfolio. This diversification helps you weather market downturns and capitalize on market upswings. Rebalancing your portfolio periodically is essential to ensure that your asset allocation stays on track. Over time, changes in the market value of your investments can cause your asset allocation to drift away from your target percentages. By rebalancing, you sell assets that have become overweighted and buy assets that have become underweighted, bringing your portfolio back in line with your desired allocation. It's important to remember that your asset allocation should be based on your individual financial situation and investment goals. Factors such as your age, risk tolerance, investment timeline, and financial objectives all play a role in determining the right mix of assets for you. While it can be tempting to follow the latest investment fad or try to beat the market, sticking to your asset allocation is a time-tested strategy for long-term success.- Maintaining your asset allocation is a key principle of successful investing. By creating a diversified portfolio, rebalancing regularly, and staying true to your investment plan, you can increase your chances of achieving your financial goals over the long term.
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