rebalansointia

Rebalansointia, which translates to rebalancing, is a financial strategy involving the adjustment of an investment portfolio's asset allocation. The primary goal of rebalancing is to restore the portfolio to its original target allocation. Over time, the performance of different asset classes will vary, causing the portfolio's composition to drift from its intended balance. For example, if stocks have performed exceptionally well, they might represent a larger percentage of the portfolio than initially planned, while other assets like bonds may have decreased in proportion.

Rebalancing typically involves selling assets that have grown to represent a disproportionately large share of the portfolio and using the proceeds to buy assets that have become underweight. This process helps to manage risk by ensuring that the portfolio does not become overly concentrated in any single asset class. It also allows investors to systematically take profits from outperforming assets and buy into underperforming ones, which can be a contrarian approach.

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 from its target allocation by a certain percentage). The specific rebalancing strategy chosen depends on the investor's goals, risk tolerance, and market conditions. It is a disciplined approach to investing that helps maintain the desired risk-return profile of a portfolio.