By Stephen L. Thomas | August 12, 2024 | In
There are many moving parts when it comes to building and maintaining an investment portfolio. One of the most important aspects is choosing the right securities to invest in. A second runner up is ensuring the portfolio is rebalanced as frequently as needed. These two actions are important because they help increase the chances of an investor reaching their financial goals, be it saving enough to buy an investment property or retiring with enough money. A portfolio can be rebalanced by investors or by finance professionals such as portfolio managers. Robo-advisors usually come with a portfolio rebalancing feature, so it’s not something investors have to worry about if they use that option. What Does it Mean to Rebalance a Portfolio? When a person puts together an investment portfolio, they typically have one or more financial goals in mind. A process called asset allocation then happens, which is where money in a portfolio is used to buy securities in various asset classes to help reach those predetermined goals. The assets chosen for the portfolio should also align with the investor’s risk tolerance. Another way to put