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Rebalance your portfolio regularly from "summary" of The Only Investment Guide You'll Ever Need, Revised Edition by Andrew Tobias
Regularly rebalancing your portfolio is a crucial aspect of successful investing. This means periodically reviewing your investments and making adjustments to ensure that they align with your financial goals and risk tolerance. When you rebalance your portfolio, you are essentially realigning your asset allocation to maintain the desired level of risk and return. For example, if your original target allocation was 60% stocks and 40% bonds, but due to market fluctuations, your portfolio now consists of 70% stocks and 30% bonds, you would need to sell some stocks and buy more bonds to get back to your target allocation. By rebalancing regularly, you are essentially buying low and selling high, as you are selling assets that have performed well and buying assets that may be undervalued. This helps to ensure that you are not overly exposed to any one asset class and helps to mitigate risk in your portfolio. It is important to set a schedule for rebalancing, whether it be annually, semi-annually, or quarterly, and stick to it. This disciplined approach can help prevent emotional decision-making and keep your portfolio on track towards your long-term financial goals.- Regularly rebalancing your portfolio is a key component of successful investing. By periodically reviewing and adjusting your asset allocation, you can ensure that your investments align with your financial objectives and risk tolerance, ultimately leading to a more balanced and diversified portfolio.
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