Portfolios
What rebalancing actually does
Over time the strongest holdings grow into a bigger share of the pot. Rebalancing puts the mix back where you set it.
A portfolio you set in January does not stay in those proportions. Holdings that rise take a larger share of the pot, and holdings that fall take a smaller one, which is drift. Rebalancing trims the winners and tops up the rest.
Why bother
The point is not to chase performance. It is to keep the level of risk you agreed to. Left alone for long enough, a portfolio tends to become concentrated in whatever has done well, and that is usually more risk than you signed up for.
On the ready mix, we do this for you and send a note when it happens. On your own mix, the dashboard shows the drift and you decide when to correct it. Either way the record shows what moved and on what date.
There is a cost to dealing, so rebalancing every week would be a waste. Once or twice a year is the usual rhythm, or when the drift has gone far enough to matter.
Good portfolios start with a question
Tell us what you are saving for, how you would like to invest and where you are up to. A person replies by email. Nothing is opened, signed or charged through the form.