Automated Investing Essentials

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Automated Investing Essentials

The process of realigning the weightings of an asset portfolio is known as rebalancing. Rebalancing is purchasing or selling assets in a portfolio on a regular basis in order to preserve the original or targeted level of asset allocation or risk.

Assume your initial asset allocation goal was 50% equities and 50% bonds. If the stocks fared well throughout the time, the portfolio’s equity weighting may have been boosted to 70%. The investor may then elect to sell some stocks and purchase bonds to return the portfolio to its original 50/50 target allocation.

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