Rebalansoidaan

Rebalansoidaan is a Finnish term that translates to "rebalancing" or "to rebalance" in English. It is commonly used in the context of investment portfolios, financial planning, and asset allocation. The core concept of rebalansoidaan involves adjusting the proportions of different assets within a portfolio to bring it back to its original target allocation.

When an investment portfolio is initially created, a specific mix of assets such as stocks, bonds, and other investments is chosen based on an individual's risk tolerance, financial goals, and time horizon. Over time, market fluctuations cause the value of these assets to change, leading the portfolio's actual allocation to drift away from the target. For example, if stocks perform exceptionally well, they might grow to represent a larger percentage of the portfolio than initially intended, increasing the overall risk.

Rebalansoidaan, or rebalancing, is the process of rectifying this drift. This typically involves selling some of the assets that have grown beyond their target allocation and using the proceeds to buy assets that have fallen below their target. This systematic approach helps to maintain the desired risk level and ensures that the portfolio remains aligned with the investor's long-term strategy. It can be performed at regular intervals, such as quarterly or annually, or when market movements cause significant deviations from the target allocation. The goal is to "buy low and sell high" in a disciplined manner, which can contribute to more consistent returns over time.