E How To Manage A Stock Portfolio Without The Hassle

Managing your own stock portfolio can be a hassle, particularly if you have a large number of stocks and bonds. Because asset performance can vary widely, you can quickly end up with a portfolio that is very different from what you intended.

Does that mean you have to pay a financial advisor handsomely to manage your portfolio for you? Not necessarily. There are things you can do to help make things easier.

And if you are currently paying a financial advisor to manage your portfolio, be aware of fees. A 1% fee may not sound like much, but it could actually cost you hundreds of thousands of dollars over the course of a lifetime.


What is Rebalancing and Why is it Important?

Depending on your portfolio mix, rebalancing can be a grueling process. Rebalancing is the process of bringing the assets in your portfolio back in line with their target allocation.

This is necessary because each asset can have very different performance. If an asset outperforms the rest of your portfolio, it will be overweight; the reverse is true for underperforming assets.

For example, if you have a portfolio of two ETFs of 50% each, and one outperforms the other for a quarter, you might end up with a 60/40 allocation.

But if you want to keep them equally allocated, you will have to be sure to rebalance your portfolio periodically. This is typically done quarterly or monthly - or you can do it automatically (more on that later).

Whatever your strategy, rebalancing helps ensure you maintain a healthy portfolio that aligns with your investing goals.

 

Go With a Simple Strategy

The simplest way to avoid rebalancing headaches is to go with a simple investing strategy. One example is having a portfolio that is 70% total stock market, 20% total bond market, and 10% total international stock market.

Of course, these percentages can be tailored to your risk tolerance and overall strategy. International investing isn’t an absolute must, but it can give your portfolio more diversity, potentially reducing volatility.

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Old Time Investor 7 months ago Member's comment

Thanks for sharing. Should help some newbies out there.