rebalanseerida

Rebalanseerida is an Estonian term that translates to "rebalanced" in English. It is most commonly used in financial contexts to describe the process of adjusting an investment portfolio to maintain a desired asset allocation. Over time, the performance of different asset classes within a portfolio can cause its composition to drift from its original target. For example, if stocks have performed exceptionally well, they might represent a larger percentage of the portfolio than initially intended, increasing its risk profile. Rebalanseerida, or rebalancing, involves selling some of the outperforming assets and buying more of the underperforming ones to bring the portfolio back to its strategic allocation.

This process is a key component of disciplined investment management. It helps to manage risk by ensuring that the portfolio does not become overly concentrated in any single asset class. It also provides a systematic way to "buy low and sell high," as rebalancing inherently involves selling assets that have appreciated and buying assets that have depreciated. The frequency of rebalancing can vary, with common strategies including calendar-based rebalancing (e.g., quarterly or annually) or threshold-based rebalancing (e.g., when an asset class deviates by a certain percentage from its target allocation). The goal of rebalanseerida is to align the portfolio with the investor's long-term objectives and risk tolerance.