Money and Finance
Rebalancing is a basic part of every investor's journey.
The process of buying ETFs, then subsequently adding to them is only one part of investing.
I've come to realise that rebalancing is an important concept which I must learn.
For example, I set my portfolio target to be 50% stocks and 50% bonds. Or 60/40. Or even 80/20. You get the idea.
Of course, as you advance and become more experienced, your portfolio may look something like this. Maybe, 60% stock, 20% REITs, 10% Bonds, 5% Cash and 5% Precious Metals?
Signing off,
Teenage Investor
Posts you might be interested in:
1. Emergency Funds
2. My Investment Journey Update: October 2014
3. The Post For All Investors; Seniors & Juniors
4. CMPB- Medical Screening for NS
- How To Invest In Shares [part 2]
Hi, welcome to Part 2 of How to Invest In Shares :) Hopefully, Part 1 was relatively beneficial with around 200+ views so far. Well, today I would be touching more on the returns of Investing! Why do we want to invest in shares? Because historically,...
- How To Invest In Shares [part 1]
I've received a few emails from different readers of my blog. One thing I noticed about was a very common question. "How do I invest in Shares?" Well, I shall try to explain in a way that's as easy to understand as possible over the space of a...
- Index Investing In The Singapore Stock Market, What Do I Buy?
Passive Investment Strategy to Index Investing When it comes to investing, most people are searching the web or mindlessly reading through blogpost after blogpost on a hundred different blogs in an attempt to search for the 1 Valuable Thing. The Best...
- Project: Dividend Stocks For Teenager October Update
I wrote how we started Dividend Stocks portfolio for my daughter before Project-dividends-stocks-for-teenager Part 2 Project-dividends-stocks-for-teener Part 1 Dividends income 2015September $49.81October LHO $18.75Total dividends up to date:...
- Stock Pics For Upcoming Week 8/24 And Last Week Purchase
I finally was able to purchase 30 shares of BNS last week. At this moment I am saving cash to help my mom with a purchase of her condo in Florida, so unfortunately I can't buy much stocks, but at least my dividends automatically reinvesting...
Money and Finance
Rebalancing & Managing your Portfolio
Rebalancing is a basic part of every investor's journey.
The process of buying ETFs, then subsequently adding to them is only one part of investing.
I've come to realise that rebalancing is an important concept which I must learn.
For example, I set my portfolio target to be 50% stocks and 50% bonds. Or 60/40. Or even 80/20. You get the idea.
Of course, as you advance and become more experienced, your portfolio may look something like this. Maybe, 60% stock, 20% REITs, 10% Bonds, 5% Cash and 5% Precious Metals?
Your portfolio is customised according to your own preference and risk appetite. Maybe you're a teenager and can afford to ride out a few market ups and downs with the long term in mind. 70% stocks and 30% bonds may be perfect for you. But as you grow older, start a family and eventually prepare for retirement, your risk appetite decreases steadily. You prefer to have 70% in bonds and 30% in stocks. That by itself, is referred to as rebalancing. Rebalancing is an optimal way of managing risk.
However, rebalancing your portfolio can trigger fees in the form of trading costs. Therefore most investors rebalance every month or even every year. To reduce this, you can consider directing fresh funds (Dividends, monthly investments) into your portfolio to rebalance.
Eg: Your Stocks may now be 59% Bonds and 41% Stocks. Instead of selling bonds, you can purchase a larger quantity of new shares for stocks until it's back to your desired quota.
What's your desired asset allocation level? Or do you simply buy dividend stocks and hope for the best? Dividend stocks or ETFs that follow the index? Do you diversify? Have a good think! Please share me with your thoughts :)
Hope this helps!
Signing off,
Teenage Investor
Posts you might be interested in:
1. Emergency Funds
2. My Investment Journey Update: October 2014
3. The Post For All Investors; Seniors & Juniors
4. CMPB- Medical Screening for NS
- How To Invest In Shares [part 2]
Hi, welcome to Part 2 of How to Invest In Shares :) Hopefully, Part 1 was relatively beneficial with around 200+ views so far. Well, today I would be touching more on the returns of Investing! Why do we want to invest in shares? Because historically,...
- How To Invest In Shares [part 1]
I've received a few emails from different readers of my blog. One thing I noticed about was a very common question. "How do I invest in Shares?" Well, I shall try to explain in a way that's as easy to understand as possible over the space of a...
- Index Investing In The Singapore Stock Market, What Do I Buy?
Passive Investment Strategy to Index Investing When it comes to investing, most people are searching the web or mindlessly reading through blogpost after blogpost on a hundred different blogs in an attempt to search for the 1 Valuable Thing. The Best...
- Project: Dividend Stocks For Teenager October Update
I wrote how we started Dividend Stocks portfolio for my daughter before Project-dividends-stocks-for-teenager Part 2 Project-dividends-stocks-for-teener Part 1 Dividends income 2015September $49.81October LHO $18.75Total dividends up to date:...
- Stock Pics For Upcoming Week 8/24 And Last Week Purchase
I finally was able to purchase 30 shares of BNS last week. At this moment I am saving cash to help my mom with a purchase of her condo in Florida, so unfortunately I can't buy much stocks, but at least my dividends automatically reinvesting...