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 ...
What is a Smart Flexi SIP?
Glide Invest's Smart Flexi SIP is a feature specially built to allow and enable you to take complete control of your goals. It gives ultimate flexibility to change the SIP amount, Pause, Stop, and Restart your SIP investments at any time, and ...
What is Goal based investing?
Goal based investing is an investment methodology where all investment decisions are made with an intent to culminate in a fixed goal at the end of a fixed duration. Some examples of goals include retirement at 60, child’s marriage at 25, child’s ...
Why are my recommended SIP values the same?
Every goal at Glide Invest will typically have 3 portfolios associated with it, matching the risk profiles on our system and the duration/tenure of the goals. Sometimes, the SIP values for the different portfolio recommendations will come out to be ...