Rebalance your portfolio regularly
Looking for ways to help keep your investment portfolio on track? Try reviewing your portfolio regularly and rebalancing when necessary.
Rebalancing requires that you take some gains off the table when an investment is performing particularly well, and reinvest those proceeds in an asset class that has been underperforming. While this may seem counter-intuitive, it can make your portfolio less sensitive to market fluctuations in the long run.
A goal of portfolio consistency
One goal of rebalancing is to put more money to work in asset classes that could be poised for a recovery. The other reason is to manage risk. If an asset class like stocks becomes overweighted in a portfolio, you may be taking on more risk than you originally planned for. Rebalancing allows you to make non-emotional decisions to buy low and sell high. This technique helps you maintain investment discipline, manage risk and keep emotions in check.
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