How do you rebalance your portfolio?
Rebalancing can be triggered based on different types of events, the two most popular being:
- Time-based trigger: Be reviewing your investments once a year, or any other pre-defined time period, you can re-calculate your asset allocations and consider rebalancing your portfolio.
- Threshold-based trigger: You can set a threshold of +/- 5% for your asset classes, and if the allocation at any point in time crosses the threshold, you can consider rebalancing your portfolio.
Rebalancing can be done in different ways, the two most popular being:
- Buy/Sell your funds: You could buy and sell portions of your funds within your portfolio in such proportions so as to match your target portfolio ratios. Make sure to keep tab of exit loads and applicable taxes in case you sell your funds.
- Modify future lumpsum/SIP transactions: You can modify future investments such that your asset allocation moves towards your target portfolio. For example, in a 50-50 equity-debt portfolio, if the current allocation based on NAVs of the funds makes it 60-40 equity-debt, you can reduce your future investment in equity funds and increase your future investment in debt funds, and review the resultant asset allocation every 3 months.
What is asset allocation?
Asset allocation is a portfolio construction strategy that involves the use of multiple asset classes to create a portfolio with risk and return characteristics suitable as per the individual’s risk profile. While equity and debt are the most ...
What is rebalancing?
Rebalancing is the process of keeping the risk-return distribution of a portfolio in check with the planned proportions over time. It is a common technique used to maintain the asset allocation of your goal or overall portfolio. Let's assume that ...
Why should I import my external portfolio using CAS on GlideInvest?
External investments are those mutual fund investments made using any platform outside of Glide Invest. They may have been done directly via the AMC's website, or through brokers, advisors or distributors. On the Glide Invest app, you can import ...
What is Consolidated Account Statement (CAS)?
CAS (Consolidated Account Statement) is a statement of all your mutual fund investments made across various AMCs and serviced by various RTAs (KFintech, CAMS, and Franklin). This statement can be generated from either of the RTAs (CAMS or KFintech). ...
What are the benefits of investing in a SIP?
Some of the benefits of investing in SIPs are as follows: Become a disciplined investor : A SIP investment would make you more disciplined in matters of managing your finances. With the option of automated payments, it means you don’t have to ...