rebalancing your investment portfolio

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Despite appearances, rebalancing an investment portfolio is a straightforward operation. As the markets have fluctuated over the past few months, some investors have seen the value of their portfolios rise while others have seen it fall. There is speculation amongst some economists that a worldwide economic downturn could be on the way. While some others may disagree, one thing is for sure: Investors should be ready to adjust their strategies and portfolios.

Your investing strategies may be challenged by the market's volatility. If investors give in to their fears and doubts, make hasty decisions, and alter their portfolio's asset mix without considering the relevant facts, the amount of risk may rise. The success of your financial strategy and the security of your loved ones could be affected by the choices you make about investments.

Rebalancing Your Investment Portfolio: Is It Easy?

Portfolio rebalancing is a process that calls for expertise, adaptability, and precise aiming. If you believe you lack the expertise or time to do it on your own, it would be best to seek expert advice from fully qualified professionals. In our blog, we will share some tips on how to rebalance your investment portfolio.

Building Your Portfolio And Diversification

The first and most important step in investing is to build a comprehensive portfolio. A portfolio is a collection of investments, such as stocks, bonds, cash, and funds that invest in a wide range of asset types. It's easier said than done, but when building a portfolio, you shouldn't invest in just one asset category. 

Asset allocation and diversification are two crucial factors that might facilitate this. When it comes to reducing exposure to risk, "asset allocation" simply means investing in a variety of different assets. Typical investment vehicles include stocks (also known as "equities"), bonds (often known as "fixed income"), and cash. 

Rebalancing Portfolio: Monitoring Your Portfolio Performance

If you have recently decided on an appropriate asset-allocation plan and acquired the appropriate securities in each asset class, it is important to keep track of the total cost of your portfolio as well as the cost of each individual investment. You may use these indicators to track the progress of your portfolio over time. By knowing what the costs are, you have the ability to decide whether an investment still suits your strategy and goals or not. If you judge that it doesn’t you can reduce exposure or even replace it with another asset.

Rebalancing Portfolio: Risk Management and Emotion

Sometimes, rebalancing is done to reduce losses rather than increase profits. Rebalancing isn't about trying to time the market; instead, it's about following certain principles regarding investing and developing a plan to keep your portfolio in line with your long-term objectives. 

Another thing that you should take into consideration is not to change your strategy based on emotions. Sometimes markets will move in favour but sometimes they can move against your plans and goals. Some investors, especially inexperienced ones, tend to suffer from stress and anxiety that can lead to making wrong decisions. Investors should minimise risks as increased risk is one of the pillars of stressful behaviours. Rebalancing your portfolio on time could reduce anxiety and stress.  

Timing Is Everything When Rebalancing Your Investment Portfolio

Timing. Investments are all about the right timing. You may have a good idea or inspiration with that one stock that you monitor for several weeks. However, choosing the right timing to invest in it will determine if your idea helped the performance of your investment portfolio or the decision turned out to be a flop.

There are many types of investors. Some will invest to help their children; others could invest to get the house they always wanted or to increase their pensions. Thirty or forty-year-old investors are likely not to have the same goals as an investor who is about fifty or sixty years old. Different goals require different approaches. Monitoring financial markets and learning more info regarding the assets that compose your investment portfolio certainly helps. Knowing the right information can help you make the right moves when the timing is appropriate.

Rebalancing Your Investment Portfolio: Learn about Admirals’ services and products

If you feel ready to start rebalancing your portfolio, at Admirals we offer our clients the ability to invest in a wide range of different stocks and Exchange-Traded Funds (ETFs). If you're interested in starting your own investing journey or making the right changes to it, click the banner below to open an account today:

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.