Rebalance your portfolio periodically to maintain your desired asset allocation from "summary" of The Coffeehouse Investor by Bill Schultheis
Every so often, you will need to reconsider your investments and determine whether they still align with your goals. This process involves evaluating your portfolio and making adjustments to ensure that it matches your desired asset allocation. By rebalancing your investments periodically, you can bring your portfolio back in line with your intended mix of assets. This means selling assets that have grown significantly in value and purchasing assets that may have underperformed. Rebalancing is important because it helps you manage risk and maintain a diversified portfolio. Over time, certain investments may outperform others, leading to a shift in your asset allocation. By rebalancing, you can mitigate the impact of market fluctuations and ensure that your investments are spread out across different asset classes. Without regular rebalancing, your portfolio may become too heavily weighted in one asset class, exposing you to heightened risk. By periodically reassessing and adjusting your investments, you can stay on track towards your financial goals and maintain a balanced portfolio.- Rebalancing your portfolio is a key part of successful long-term investing. It allows you to stay disciplined and avoid making emotional decisions based on short-term market trends. By following a consistent rebalancing strategy, you can ensure that your investments continue to support your financial objectives over time.
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