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Create A Better Future

Successful Investment Management 101 – Portfolio Rebalancing

Rebalancing your portfolio could help you save you from your neck…and your heart! "Rebalancing" is definitely one of the least understood concepts for individuals, however, it should be among the most frequently followed by every single investor. 

In the end, institutions have been following it for years and don't consider ignoring it. Rebalancing is the process of rebalancing the weightings of your collection of investments. You can visit www.edwardjones.com/us-en/financial-advisor/tyler-simonds to get portfolio review from reliable financial advisors. 

How To Rebalance Your Investments Forbes Advisor

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For instance, if the proportion of stocks in your portfolio has risen to a level that is too high for the weightings you want for your assets and the risk level, you could adjust your portfolio by selling stock and then converting it to bonds or cash. Sometimes all it takes is a regular rebalancing of your portfolio, returning to your preferred mix of fixed income and stocks to smooth out the bumps.

Making these changes can be an enormous difference in financial success or a disastrous failure. A study conducted by Brinson, Singer and Beebower discovered that the right allocation of assets, and the choice of which categories of assets to invest and the amount, was responsible for 91.5 percent of the performance of an investment portfolio! 

Other factors, such as market timing, the selection of security, and so on are just 8.5 percent. This may be a shock for the majority of investors. The right asset allocation is contingent on more than your financial situation but also your life's objectives and desires.