There are many reasons for rebalancing a portfolio, but when it is done, investors must pay attention to the cost and tax factors
November 03, 2021 / 09:51 AM IST
The world of personal finance investing is dynamic. So, rebalancing one’s portfolio is as important as asset allocation. This depends on various factors that could be at the macroeconomic, asset-specific or even personal level. Rebalancing is a process of restoring the investor’s portfolio to its target allocation. It helps to review the risk-return weightages, to get back to the desired asset mix.
Rebalancing is usually done by divesting underperforming assets and investing in the ones that have the potential to…