efficiently, treat them the same way you would with your health.
The age-old saying that prevention is better than cure has so much wisdom to it – why would anybody want to fix a problem that could’ve been avoided in the first place? That’s precisely why it’s important to always be on-the-ball with our health.
Is our muscle-to-fat ratio ideal for our body weight? Should we incorporate a new exercise to help strengthen our backs? Is it time to switch up the diet we’ve been following for the past few months? We depend on the expertise of our fitness coaches as they scan our bodies to keep us in the best bill of health.
Your investment portfolios are not too different from getting a fitness check-up. Have your asset allocations significantly changed over the last few months? Did your stock percentages increase after the GE14 shakeup? And most importantly… have your investments gone beyond your tolerance for risk?
One smart thing which you can do to be proactive in your well-being is to regularly see a fitness coach for an expert diagnosis. Similarly, you need to review what’s happening to your investment portfolio before you begin to rebalance it. You cannot expect your investment portfolio to be the same way it was a year ago.
How should I rebalance my investment portfolio?
Big events that happen in the financial world are akin to what goes on in your body. Prolonged hot days and you may need to hydrate twice more. A little too much greasy food and it would be wise to hit the treadmill before something goes wrong.
Likewise, big events like the General Elections or the Budget tabling are factors that will inadvertently affect how your investments are being made. Without the right advice, you may not get the expected return. So what would a fitness coach do? First thing’s first – scan your vitals and run you through a series of drills and tests to score your fitness levels. Then, he/she would review your lifestyle and diet, before finally advising you on how to be stronger, healthier, and further away from any illness or problems.
Similarly, you would first need to review your ideal asset allocation. Then, determine your ideal allocations, after which you can come up with a rebalancing plan that is in line with your financial goals.
How you balance your portfolio will largely depend on your lifestyle too. Let us illustrate with three simple examples.