August 27, 2020
Benefits of Rebalancing
Diversifying your investment portfolio means putting together a mix of stocks, bonds and other investments with your financial goals, time horizon and risk tolerance in mind. Your mix is called your asset allocation. The idea behind diversification is that, overall, owning different kinds of investments should earn you higher returns with less risk than holding any individual investment. Establishing the mix, or asset allocation, right for you is one of the most important factors in determining long-term investing success. But then you must do the ongoing maintenance necessary to produce your desired results and control your risk. This occurs through a process called rebalancing, which restores your portfolio to its original asset allocation and risk profile.