Rebalancing enforces discipline
Periodic rebalancing systematically trims what's grown and tops up what's lagged.
What it means for your portfolio
It enforces 'buy low, sell high' without needing to forecast anything.
Does this apply to your holdings?
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Fees compound too
A 1% annual fee can consume a large share of lifetime returns once compounded over decades.
The reward for equity risk is slow
Broad, diversified equity indices have historically compounded around 7-10% a year nominal over the very long run, with multiple 30-50% drawdowns along the way.
Turnover has a tax cost
Frequent trading can trigger capital gains and reduce compounding; in Australia, holding an asset over 12 months can access the CGT discount.
General information only, not financial advice. Historical figures are approximate and provided for education.