Rebalancing a long-term stock portfolio is important to maintain your desired risk level and investment goals. It helps keep your portfolio balanced by adjusting stocks that have grown too much or too little. This prevents your portfolio from becoming too risky or too conservative over time. Regular rebalancing also helps lock in profits and avoid big losses.
What Does Rebalancing a Long-Term Stock Portfolio Mean?
Rebalancing means adjusting the percentage of stocks in your portfolio to the original plan. For example, if some stocks perform very well and take up more space, you sell some to buy others. This keeps your investments in the right proportions to reduce risk and meet your long-term goals.
Why is Rebalancing Crucial for Long-Term Investors?
It controls risk by preventing any single stock or sector from dominating your portfolio. Markets change over time and some stocks may become too risky. Rebalancing helps keep your investment safe while staying on track for your financial goals. It also enforces discipline, avoiding emotional decisions during market ups and downs.
How Often Should Long-Term Portfolios Be Rebalanced?
For long-term portfolios, rebalancing once or twice a year is recommended. You can also rebalance if your allocation shifts by more than 5% from your target. This helps you stay on track without too much buying and selling.
Does Rebalancing Improve Long-Term Returns?
Rebalancing may not always increase short-term profits but helps protect your portfolio during market falls. It encourages buying low and selling high, which can improve returns over time. This leads to more stable growth and lower chances of big losses.
How Can Indian Investors Rebalance Their Stock Portfolios?
Indian investors can use online platforms like Angel One to easily track and rebalance their stock portfolios. Regular portfolio review and adjustment can be done with few clicks. It’s important to consider taxes and transaction fees while rebalancing. Staying disciplined with rebalancing helps Indian investors reach their financial goals safely.
Contact Angel One Support at 7748000080 or 7771000860 for mutual fund investments, demat account opening, or trading queries.
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