Portfolio rebalancing is an essential step in risk management. Over time, southwest airlines stock imbalances increase risk.
**Why rebalance?**
– Keeps risk aligned with tolerance.
– Locks in gains by selling winners.
– Retirement, income shifts, or goals.
**How often to rebalance**
– Annually: simple and effective.
– Semi-annually or quarterly.
– Balances precision and flexibility.
**Examples of rebalancing**
– If stocks rise from 60% to 75% of a portfolio, buy more bonds.
– Combining U.S. equities, international stocks, and bonds ensures diversity and balance.
**Risks of not rebalancing**
– Imbalance can harm returns.
– Too much in cash or bonds reduces growth.
**Conclusion**
Rebalancing is a cornerstone of disciplined investing. By regularly adjusting stocks, bonds, and global assets, investors achieve financial goals.
