“Re-balancing of Portfolio” is the term, which is widely used in the mutual funds industry, by the so called media-prophets & with most of the advisors with banks/ brokers/ CFP.
What does re-balancing means? And how does it applies to one’s portfolio?
As per Investopedia: Re-balancing is the process of buying and selling portions of your portfolio in order to set the weight of each asset class back to its original state. In addition, if an investor’s investment strategy or tolerance for risk has changed, he or she can use re-balancing to readjust the weightings of each security or asset class in the portfolio to fulfill a newly devised asset allocation.
In an ideal scenario on portfolio recommendation, which is based on tenure of goals & the risk tolerance score,