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To maintain your target asset allocation, you know you should periodically sell some of what's become overweight in your portfolio and buy what's underweight. Most people use the calendar approach -- rebalancing every January, for example. But if the markets are moving significantly (and you're a hands-on investor), you're better off using the trigger-point approach, says Seth Masters, a chief investment officer at AllianceBernstein.
Anytime the percentage of an asset in your portfolio rises, say, five percentage points above your target, rebalance. That way if the market makes any more quick and crazy moves, you won't be waiting for months to get your portfolio back the way you want it.
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