Every investor is subject to the whims of the market. Here's one way to profit from the inevitable ups and downs. Let's say your portfolio is made up of mutual funds. At the end of each year—better yet, every quarter—consider how much you have in each fund. Then target new money to the funds that have done poorly. Many retirement plans offer automatic rebalancing, so you don’t have to worry about it. Rebalancing keeps your portfolio diversified by preventing your wealth from becoming concentrated in a small number of investments.
This disciplined approach to investing helps ensure that you're buying lower and selling higher, which certainly beats the buy-high-sell-low trap that snares many investors. "Rebalancing takes guts—it's hard to reward losers—but it works," says Kiplinger.com columnist Steven Goldberg.
Actionable Items
It is most important to stay on the course. Do not give in fear. No matter how hard it is, I always can survive to live a frugal life.
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