| Topic : Portfolio Management |
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Balancing my investment portfolio
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Activity:
34 views;
last activity : 07 06 2010 20:18:09 +0000
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Annual rebalancing
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Focus on the long term
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Minimum commitments:
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This is the way I do it every time. There has to be annual rebalancing. Remember that rebalancing does not need to be frequent - annually is sufficient. However, your actual portfolio allocations will be constantly changing due to varying performances and as you withdraw funds. |
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Frequency of portfolio rebalancing basically depends upon the risk tolerance level of an individual and therefore, one has to define his/her risk tolerance level- in terms of certain % change its origional composition, due to asymetric movement of the prices of the instruments in the portfolio or based on periodicity like monthly/quarterly etc.. Sometimes, rebalancing is done to take advantage of specific markets/instrumentsbased on private information orother reasons. Dynamic programing based approach is widely used by top fund managers and academicians also accept its superiority and simplicity in designing and re-balancing optimal portfolio.
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Enjoy the bull market while it lasts, but don't let several
terrific years deflect you from a long-term strategy. In short, I suggest remembering:
The market does advance, but in cycles that go down as well as up. Plan
your asset allocations for the long term through both phases.
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I totally agree with arijit.Make right investments in right sectors and let it be invested for long term so that the investments could realise its true and full potential.
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At least 10 per cent of a portfolio must be committed to a
market segment to have a meaningful impact on your portfolio. If your
desired allocation to a particular asset class is only 10 percent, you would
not want to stray below that amount by very much; in contrast, falling a few
percentage points below a 30 percent desired level would be less of a concern.
So over commitment is dangerous.
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Really good one Suchitra....i have many female friends who really are into investing...and they are really are smart while investing and are doing really good...and i have given money to a friend who is doing all the investing as she is very... |
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