Rebalance Your Investment Portfolio Annually

 

When you invest, choose an asset allocation that reflects your risk tolerance and risk capacity. If you’re younger, you might hold higher-risk and higher-return stocks and fewer bonds.

This riskier portfolio will likely be compounding with higher returns over time. After setting your preferred asset allocation, make sure to rebalance your portfolio every year to get back to your original allocation. This simple strategy can yield a small increase in returns and a decrease in volatility.

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