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The benefits of quarterly rebalancing  

Rebalancing is a simple but often forgotten tool for managing investment portfolios. It involves periodically buying or selling assets in a portfolio to maintain a desired level of asset allocation or risk. 

A lot of work goes into selecting the relevant split of investment types, such as shares, property, bonds, cash, for your portfolio.  That becomes your target allocation.  Which may change as your strategy or risk tolerance changes but not just because investment markets or values change. 

Rebalancing is great for managing the risk in your portfolio and making sure it is aligned with the risk you planned to take on. A key benefit is you’re always selling when values have gone up (sometime only relatively speaking) and buying when values have gone down.  That’s always a good idea. 

It’s impossible to get the timing of that perfect, so you buy at the lowest and sell at the highest.  Even though many people will tell you they can do it.  But let’s work toward progress not perfection. 

Rebalancing at set intervals, such as quarterly, is a helpful way of removing the desire to try and pick the right time. You plan in advance and execute it at the agreed time. 

Over the long term it adds a lot to managing risk, helping to stick to your plan and may improve results. 

The information in this blog post is general advice and does not consider your individual objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement. Should you have any questions please contact us on 02 9232 6800. 

It’s my job here at Evalesco to work with my clients to maximise the likelihood that they achieve what is important to them in their life.

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