How to manage your portfolio

Source: Seeking Solid Middle Ground by Tomoeh Murakami Tse, Washington Post staff writer

First, you should figure out what your target asset allocation should be. What should be the % of stocks and fixed incomes.

Rebalancing

Is there anything new that would cause me to change my asset allocation?

Do my financial circumstances really fit what's happening in my personal life?

Why

Rebalancing helps you control your risk; it's not a way to make more money; it's a way to protect what you have.

Rebalancing is a simple enough concept -- selling the stars and buying the lesser performers.

It allows investors to implement a famous but difficult investment strategy: buy low, sell high.

How

You should check on a portfolio once a year; and fight the urge to look at your accounts more often than that..

Rebalance your portfolio if a particular asset class is off by more than 10% movement is a good trigger, with more room if necessary to let winners run their course.

If you rebalanced every time the market moved 5% on its way up, you would have rebalanced 18 times during stocks' recent four-year recovery.