Advertisement
From time to time, Canadian investors may need to rebalance their portfolio due to market activity. Find out how to rebalance your portfolio.
Rebalancing refers to adjusting the asset allocation of your investment portfolio. Asset allocation is the mix of different asset classes in a portfolio such as stocks, bonds and cash.
Based on your time horizon, investment knowledge, risk tolerance and other factors, a financial advisor will recommend a specific mix, such as 60% stocks, 40% fixed income. Usually this is also broken down by domestic and international, small-cap and large-cap stocks and other criteria.
If you’re a DIY investor, you may not have a specific target for your asset allocation. But you may have a gut feel that you’re uncomfortable with more than a set amount of money in a specific asset class.
Market activity is the most common reason people need to rebalance their investments. For instance, if your target is 60% stocks, 40% bonds and the stock market has been soaring, the stock component of your portfolio may have grown well beyond 60%.
To rebalance your investment portfolio, you could:
Example: “When the stock market collapsed, Javon rebalanced his daughter’s registered education savings plan (RESP) to return to the 80% stocks, 20% bonds he was targeting. Rebalancing provided the added benefit of buying stocks when prices were low.”
Share this article Share on Facebook Share on Twitter Share on Linkedin Share on Reddit Share on Email
You’ve reached your 40s, are mid-way in your career and realize you’ll never have a pension. Here’s how to...
Find the best GIC rates in Canada. Plus, everything you need to know about how they work.
Have an RESP, now what? If you’re wondering how to withdraw that money to pay for school (or not),...
Which ETFs should you invest in? Which ones best suit your risk tolerance? What about personal ethics? Check out...
Falling U.S. inflation leads to rate cut certainty, Walmart’s strong quarter, Barrick beats Franco-Nevada for the gold metal, and...
These 25 books, chosen by MoneySense contributors, money experts and finfluencers, will help you invest better, retire earlier, find...
How a small group of nuns in rural Kansas vexes big companies with their investment activism.
Do you only have limited cash to invest? Fractional trading makes company shares more accessible—just don’t skip the market...
Here’s how freelance workers and entrepreneurs in Canada can use the unique aspects of “working for yourself” to build...
