136
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One of my stock positions has grown substantially. Should I rebalance my portfolio?
So, you have a portfolio of around 50k, and you're wondering whether you should change it. The question I always ask myself in this kind of situation is:
If someone gave you 50k today, how would you ...
- 966
69
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Why are cryptocurrencies not considered proper investments?
Stocks, bonds, and real estate all have the advantage that they are investments in underlying assets that are expected to become more valuable over time. Economies grow over time which means that, ...
- 26.5k
37
votes
Why are cryptocurrencies not considered proper investments?
Imagine a doomsday scenario and consider: what is stopping the value of the investment from going to zero? You mentioned four investments:
Real estate: if everyone suddenly decided your house is ...
- 2,664
29
votes
Accepted
What does a well diversified self-managed investment portfolio look like?
"Diversified" is relative.
Alfred has all his money in Apple. He's done very well over the last 10 years, but I think most investors would say that he's taking an incredible risk by putting ...
- 115k
17
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Why are cryptocurrencies not considered proper investments?
Do you consider tulip onions to be a proper investment?
This is not a rhetorical question. Rather it is a question, which answer has to be informed by history:
The first historical record of an ...
- 171
16
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Accepted
Should I exclude bonds from our retirement investment portfolio if our time horizon is still long enough?
Having cash and bonds in your portfolio isn't just about balancing out the risk and volatility inherent in equities. Consider: If you are 100% invested in equities and the market declines by 30%, you'...
- 31.7k
14
votes
What does a well diversified self-managed investment portfolio look like?
When you invest in a single index/security, you are completely exposed to the risk of that security. Diversification means spreading the investments so the losses on one side can be compensated by the ...
- 1,527
14
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One of my stock positions has grown substantially. Should I rebalance my portfolio?
Before you buy a stock (or anything else to be honest) you should have an entry and an exit criteria set. These criteria should be based on a calculated metric rather than a fixed number or a ...
- 8,801
13
votes
One of my stock positions has grown substantially. Should I rebalance my portfolio?
In addition to the other helpful answers here, I think a practical consideration/caution is in order.
Rebalancing is a good idea in general, but it does have costs. Every time you make a transaction ...
- 35.7k
13
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Is it risky to move from broad geographical diversification into investing mostly in less developed markets?
what else is wrong with focusing on less developed markets exclusively?
Less developed markets are risky, because they're volatile and prone to high inflation.
That means you can lose a lot of money....
- 50.6k
12
votes
Accepted
Are REITs more correlated with the stock market or the real estate market?
It depends on what you mean by "the real estate market". If you consider that REITs distribute income from real estate lease income and property appreciation, you could say that REITs are the real ...
- 130k
12
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Accepted
What is the point of portfolio diversification?
You're right that diversification isn't the way to maximize your return irrespective of risk. If you want the highest return possible, you need to select investments that can give you that return - ...
- 6,488
11
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What does a well diversified self-managed investment portfolio look like?
Diversification is spreading your investments around so that one point of risk doesn't sink your whole portfolio. The effect of having a diversified portfolio is that you've always got something that'...
- 3,501
11
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Why are cryptocurrencies not considered proper investments?
If you own a house, then that house is creating economic value by providing people a place to live, and you will be receiving money in exchange for providing that value. Stocks and bonds are more ...
- 9,800
11
votes
Why are cryptocurrencies not considered proper investments?
People don't see cryptocurrencies as proper investments because they are new. This is not entirely unreasonable. Proper investments like stocks, bonds, commodities, gold and real-estate have 100+ year ...
- 478
7
votes
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How to invest in a specific market without investing in a specific company?
You need to hope that a fund exists targeting the particular market segment you are interested in. For example, searching for "cloud computing ETF" throws up one result.
You'd then need to read all ...
- 27.9k
7
votes
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Is there any advantage in holding international mutual funds, even if they don't outperform domestic equities?
Is this true?
The answer is not a simple yes or no. It's like asking if all other colas are better than Pepsi. There are hundreds of international markets and thousands of funds that target those ...
- 130k
7
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I opened my Roth IRA account. Does it makes sense to diversify my initial contribution of $5500?
It varies.
Depending on your brokerage, they may charge you per transaction, so the more transactions, the higher the cost. Though this (from what I've seen), is uncommon with many index funds. In ...
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7
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One of my stock positions has grown substantially. Should I rebalance my portfolio?
Vanguard said about it from Best practices for portfolio rebalancing(Link):
The primary goal of a rebalancing strategy is to minimize risk
relative to a target asset allocation, rather than to ...
- 715
7
votes
Accepted
Should a person sell all/some/none of the stock they receive when their former employer goes public
Long-term capital gains taxes are fairly low, and moreover there's a good chance that such taxes will have to be paid at some point anyway (you'll sell later if not now). The advantage of diversifying ...
- 29.4k
6
votes
Why diversify stocks/investments?
Basically, diversifying narrows the spread of possible results, raising the center of the returns bell-curve by reducing the likelihood of extreme results at either the high or low end.
It's ...
- 42.9k
6
votes
Accepted
How should residents of smaller economies allocate their portfolio between domestic and foreign assets?
why should I have any bias in favour of my local economy?
The main reason is because your expenses are in the local currency.
If you are planning on spending most of your money on foreign travel, ...
- 21k
6
votes
One of my stock positions has grown substantially. Should I rebalance my portfolio?
Conventional wisdom is that one should rebalance one's portfolio in order to balance risk and reward, adhering to the goals of a portfolio. It's the most important decision that you can make after ...
- 75.7k
6
votes
Accepted
Should I diversify? If so, into what?
Ultimately, yes, you should diversify, being solely invested in residential real estate is somewhat risky, a mix of stocks, bonds, and real estate would most likely be safer. The harder questions to ...
- 69.1k
6
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Diversification in practice: Choosing a couple of index funds (UK)
Non-US investors have to be a bit careful when interpreting material written for US investors for their own markets. The US market comprises ~54% of global market cap (in indices like MSCI World or ...
- 3,937
6
votes
Accepted
Does it make sense to invest in multiple index funds?
This looks fine, and depending on your exact risk profile is probably pretty close to optimal for someone of your age and aims. You should just jump in and buy them in their relevant percentages from ...
- 5,768
6
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What is the point of portfolio diversification?
You are assuming that assets go up and down equally. But if such assets exist, then there's no point in investing in them, as you will make no money in the long term.
Most investments go up, on ...
- 9,781
6
votes
What is the point of portfolio diversification?
The goal is not to perfectly diversify such that you get zero risk (and hence return, the goal is to decide on a risk level that you're comfortable with and design your portfolio accordingly so that ...
- 130k
5
votes
Tax implications of diversification
(All for US.)
Yes you (will) have a realized long-term capital gain, which is taxable. Long-term gains (including those distributed by a mutual fund or other RIC, and also 'qualified' dividends, both ...
- 4,518
5
votes
Accepted
Tax implications of diversification
Yes, to change which stocks you owe you need to sell one and buy the other, which for tax purposes means taking the profit or loss accrued up to then. On the other hand this establishes a new baseline,...
- 42.9k
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