If you are an investor in stock market; either thru Direct stocks, IPO applications, Mutual Funds or other mode of investments; you must consider timely rebalancing of your investment portfolio. Why rotation and rebalancing of investments is strongly advised:
- To keep your investments, according to current trends of global market
- To keep you investment secured, according to current balance sheet strength of companies
- To keep your investment with highest yield, according to best profit earning stocks
- To keep close watch on mutual fund portfolio reports
- To regularly follow asset allocation of mutual funds in equity and debt categories
- To reshuffle between mutual funds; large caps, mid caps, mix caps
- To get sectoral benefits on investments; Pharma shares, FMCG shares, Banking shares, Technology shares
- To make proper income tax planning
- To make future planning; child education, child marriage plans, buying a house etc.
Year 2020 has taught everyone about how world can change on a single click (COVID) and best learning from this is to remain well planned for non-earning days. In covid times, investors switched from Infrastructure shares to Pharma / hospital shares; from Real-estate shares to FMCG shares; from Banking shares to Digital online business shares….. and minted huge profits, just by ROTATION OF INVESTMENT PORTFOLIO. Everyone cannot be expert, but can use expert advice of investment advisors for better profit making portfolio.
Your own asset allocation (with your available savings) is most important; wherein you have to make decision matrix with best tax planning, future plans, retirement plans, living liability plans etc. You need to decide, what kind of mutual fund SIP or direct one time investment you have to make. For example during stock market crash in march 2020; most of prudent investors made one time investment in mutual funds and paid one time contribution (in addition to regular SIP). This rebalancing brought, huge profits by September 2020 and proven their right decision at right time, with proper investment advisor. Covid has ruined balance sheet of many business houses and traditional business models, wherein at the same time, has brought super profits in result oriented digital business houses.
Rebalancing is also advisable for better Risk management, since you are investing your hard earned money, so you need to keep close watch on your allocated assets, sectors or type of investment instruments. Right entry and profitable exit policies shall be followed by all classes of investors, eg. Business investors, salary class investors, retirement plan investors etc. Author CA Yogesh Birla is a passionate investor and love to share innovative investment strategies, as knowledge sharing with friends and connects.
Birla WP Management
visit us at : www.YogeshBirlaCA.Blogspot.com
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