Investing is a means for individuals to increase their wealth. Investing comes in all styles and flavors, and is as varied as the individuals who invest. It is basically placing your money in an investment vehicle (such as a stock, bond ETF or Mutual Fund, which we will discuss later), instead of letting it sit in a low returning, traditional bank savings account.
What is portfolio rebalancing? Portfolio rebalancing is the periodic realignment of a portfolio’s holdings through buying or selling incremental share lots to maintain the originally desired level of holdings. This rebalancing process restores portfolio holdings to their optimal target allocations, helping investors avoid portfolios drifting too far away from their initial and intended objectives. A typical rebalancing strategy tends to sell (trim) assets that have significantly appreciated in price, while adding to those that have declined. At its core portfolio rebalancing is a risk‐minimizing strategy.
Setting your investment objective(s) and expectations is probably first thing an investor should think about before investing. Knowing why you’re investing is the easy part, however getting there requires a bit more planning. Thus, whether you’re saving for retirement, buying a home, or setting aside money for the children’s college tuition, laying out a financial plan is the first step.
When it comes to retirement investing, the cardinal rule is start as early as possible! The more you invest and the earlier you start, the more time your retirement savings will have the potential to grow in value. No one knows where the social security system will be 10, 20 or 30 years down the road, so planning for your golden years should start with you and not rely on the government. In the column below we will share some insights on retirement planning.
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