Learn about rebalancing portfolios. The basic idea is this:
>pick a ratio of socks/bonds/crypto
>every year at the start of the year, sell and buy to meet that ratio
For example, let's say you want 50/25/25. You start with $1000: $500 in stocks, $250 in bonds, and $250 in crypto. This exposes you to a good amount of risk for a young person (21-35).
Now, it's been a year, and stocks have boomed, bonds have stayed the same, and crypto tanked. Now, you have $750 in stocks, $250 in bonds, and $150 in crypto.
If you do nothing, the next stock bust will wipe out your gains, and you won't benefit from the crypto & bond booms that follow. So, rebalance.
Remember, you want 50/25/25. You have more than $1000, now, so leave $575 in stocks, move $37 to bonds, and move $138 into crypto.
Now, you have $575 in stocks, $287 in bonds, and $288 in crypto. When the bust/boom cycle switches over, you're positioned to gain more.
>But what if stocks still go up, and crypto keeps going down?
You'll still make money. You have 50% of your potfolio in stocks.
>If I know the boom/bust is about to switch, why wouldn't I move all my money into one type of asset?
Nobody knows when the boom/bust cycle changes over. Balancing just makes you ready when it does.
>This sounds like a lot of math.
It's 10 minutes with a calculator, once a year. Git gud.
>I'm still not sold.
Pick up "The Elements of Investing." It explains rebalancing in more detail.
Attached: 1544029605411.jpg (443x455, 96K)
