Rebalance your portfolio
A portfolio is bound to drift away from its original asset class percentages over time. When that happens it should be adjusted and put back in line with your targets. This “adjusting” process is known as rebalancing, and it can be done in a variety of ways.
You can sell a portion of the over-weighted piece and add it to the under-weighted class or you can add new funds to the under-weighted part of your investment portfolio. On top of this, you can also withdraw from the over-weighted asset class to rebalance your portfolio.
According to many financial experts rebalancing is the most effective way to sell high and buy low without any risk of your emotions getting in the way of investment decisions. It can also take your portfolio back to the original level of risk tolerance and boost its performance.
