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rebalancing your portfolio

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Asset allocation: Make sure your portfolio represents a balance of cash, bonds and stocks. Also understand your investment goals. Low-risk investors should seek more fixed-income investments.

Cash: When rebalancing, you should always hold about 5 to 10 per cent in cash. This will allow you to invest when an opportunity arises in the market.

Industry: Look at the industries you are invested in - they should be broadly diversified to protect you from overexposure to underperforming businesses. Do not buy stocks that overpopulate any one industry. Any one sector should not comprise more than 30 per cent of your investments.

Percentages: Consider rebalancing if your allocation of money changes five to 10 percentage points up or down. Determine this by looking at the percentage of your total holdings in different asset categories. Don't just look at the dollar amounts.

Taxation: If you have plans to retire or work abroad in future, take note of possible currency risks and tax implications. Seek advice from financial advisers.

Exit penalties: Ensure that you are aware of all exit penalties. Remember that deposit accounts with financial institutions are not free.

Liquidity: Avoid investing in stocks that have low turnover or liquidity. You might face difficulties getting rid of them when desired.

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