If your goal is to build long-term wealth, retire early, and never have to work till you’re old and grey-haired, it goes without saying that you need a plan, especially in this fast-paced world. If you plan to make your wedding anniversary unforgettable, you won’t just “wing it”; you’ll have a plan. Building wealth is also that way. Sure, you could get lucky without a plan, but planning helps. From your stock picks to your diversified investment strategies, from monitoring to adjusting your portfolio to meet your financial goals, it all boils down to automating your personal finances.

Creating wealth requires you to follow up with a lot of things almost at the same time, along with managing your daily life, whether you run a business, work 9-5, or do both. One best way to avoid sinking into chaos is through automatic wealth rebalancing.

What Is Automatic Wealth Rebalancing?

Rebalancing is an investment management strategy used to maintain a desired asset allocation over time. With rebalancing, you can buy and sell investments to return your portfolio to its intended portfolio mix. This means that as investment changes in value, you can deviate from your original asset allocation and concentrate more on one or more investments instead.

Wealth rebalancing doesn't only happen when investments reduce in value. It could also be possible in an up-market when some investments grow faster than others, leading to an out-of-balance portfolio.

Automatic wealth rebalancing is when a financial expert, investment company, or app rebalances investment portfolios without having to do it yourself. Most investment companies automate your personal finance as an add-on feature, so you don’t have to worry about doing it yourself.

How Often Do You Rebalance Your Wealth

When it comes to automating your personal finance, there are two main strategies you can use, the first one is based on time, and the other is based on the mix of assets, but whichever one you choose, it’s best to stick with it. 

Periodic Rebalancing: You could choose to rebalance your portfolio once or twice a year on a set schedule consistently. For instance, you could choose to rebalance your portfolio every 31st of December, on your birthday or wedding anniversary.

Percentage-based Rebalancing: You can do this when your portfolio mix exceeds your preferred risk level. Based on how the market performs, you can rebalance as much as you want or not at all. For example, if your investment is 30% of your portfolio and it falls below 25% or rises above 35%, it could trigger a rebalance.

Benefits of Automatic Wealth Rebalancing

1. Reduces Risks: Automatic rebalancing typically reduces risk in your portfolio. Automating your personal finances ensures you don’t miss rebalancing triggers and protects your portfolio from unnecessary risks.
2. Hands-Off Approach: With automatic rebalancing, you can cut out mundane tasks and focus on your responsibilities without having to track your portfolio performance for outliers or worry about rebalancing it on a certain date.
3. Reduce Emotional Decision-Making: One of the biggest challenges investors face is the temptation to make emotional decisions in response to market fluctuations, and that’s where automating your personal finance comes in. Automatic wealth rebalancing takes the emotion out of investing by implementing a systematic and rules-based approach to portfolio management. Instead of reacting impulsively to market volatility, you can rely on a predefined rebalancing strategy to guide your investment decisions, leading to greater discipline and consistency in your approach to wealth management.
4. Save Time and Effort: Managing a diversified investment portfolio can be time-consuming and labor-intensive, especially for busy professionals and individuals with limited investment expertise. Automating your personal finance streamlines the investment process by automating the tedious task of monitoring and adjusting portfolio allocations. This frees up valuable time and resources that investors can allocate to other aspects of their lives, such as pursuing their passions, advancing their careers, or spending quality time with loved ones.
5. Stay On Track With Your Financial Goals:  another significant benefit of automating your personal finance is the ability to help investors stay on track with their long-term financial goals. By maintaining a disciplined and systematic approach to portfolio management, investors can avoid common pitfalls, such as market timing and performance chasing, that can derail their investment objectives. Instead, they can focus on the bigger picture and take comfort in knowing that their investment strategy is designed to withstand market volatility and achieve their desired outcomes over time.

Automating your personal finance offers a myriad of benefits for people seeking to optimize their investment portfolios and achieve their financial goals. From maintaining optimal asset allocation to enhancing portfolio performance and reducing emotional decision-making, automatic rebalancing provides a powerful tool for navigating the complexities of the financial markets with confidence and ease.

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