What are some effective rebalancing strategies for my investment portfolio?
Rebalancing strategies involve adjusting your portfolio to maintain your desired asset allocation. Common methods include periodic rebalancing, threshold rebalancing, and strategic rebalancing.
Can you explain the periodic rebalancing method?
Periodic rebalancing involves reviewing and adjusting your portfolio at regular intervals, such as quarterly or annually, regardless of market conditions.
What about threshold rebalancing?
Threshold rebalancing triggers adjustments when an asset class deviates from its target allocation by a certain percentage, allowing for more responsive management.
Which strategy do you recommend for a long-term investor?
For long-term investors, periodic rebalancing is often recommended as it provides a disciplined approach while minimizing transaction costs.
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