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Rebalance your portfolio regularly from "summary" of The Smartest Investment Book You'll Ever Read by Daniel R. Solin
Regularly reassessing and adjusting your investment portfolio is a critical step in maintaining financial health. This practice, known as rebalancing, involves periodically reviewing the assets in your portfolio and making necessary changes to ensure that your investments align with your goals and risk tolerance. Rebalancing is essential because over time, the performance of different investments can vary, causing your portfolio to become unbalanced. For example, if one asset class performs exceptionally well while another lags behind, the overall risk profile of your portfolio may shift. By rebalancing, you can realign your investments to maintain the desired level of risk and return. There are several approaches to rebalancing a portfolio, including calendar-based, percentage-based, and threshold-based strategies. Calendar-based rebalancing involves adjusting your portfolio at regular intervals, such as quarterly or annually. Percentage-based rebalancing involves setting target allocations for each asset class and adjusting them when they deviate by a certain percentage. Threshold-based rebalancing involves setting specific thresholds for each asset class and rebalancing when those thresholds are breached. Regardless of the method you choose, the key is to establish a disciplined approach to monitoring and adjusting your portfolio. By regularly reassessing your investments and making strategic adjustments, you can mitigate risk, enhance returns, and stay on track to meet your financial goals.- Rebalancing your portfolio regularly is a fundamental aspect of successful investing. By staying vigilant and proactive in managing your investments, you can ensure that your portfolio remains aligned with your objectives and risk tolerance. Embrace the discipline of rebalancing to maximize the potential of your investments and secure your financial future.
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