For those investors out there, you might find golf and investing share a lot of similar attributes. Both require careful planning, patience, and discipline, to site a few examples. Charles Schwab, Hong Kong, Ltd., a financial services firm serving investors in Asia, certainly believes so.
Schwab Investing Tip
In the last issue we discussed the importance of formulating an investment plan. But it's just as important to know that you'll need to revisit that plan from time to time. So how often and when should you do that? There will be occasions in your life or dramatic changes which will affect your risk tolerance, for example. But in addition, you need to revisit your plan to rebalance your portfolio. And you want to do that on a disciplined frequency – at least once a year.
It's important to rebalance because over time your portfolio can shift. If the stock market really takes off, your portfolio could potentially take on a little more risk than you originally planned. And vice versa, if bond markets are doing well, you can have a little less risk in your portfolio, and therefore less expected return. Rebalancing is important to achieve your desired risk level.
Disciplined frequency is critical because many investors tend to react to whatever has happened in the recent past. That can be dangerous and you want to avoid that approach. Instead, you want to rebalance on a disciplined frequency irrespective of what's going on in the marketplace. Bottom line: when it comes to rebalancing, disciplined frequency is the key.
