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Portfolios 101: Steps to a Suitable Portfolio

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1.
When rebalancing your portfolio, it is a good idea to weed out redundant investments.
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True. When you have redundant investments, one of them usually has lower expenses and a stronger long-term risk/reward profile, which can make it an advantage.
2.
You will want to keep tabs on your individual investments in order to make sure theyre _______.
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Still filling their original roles in your portfolio. Changes in management, style, and other factors can alter how well your investments are working for you.
3.
To determine whether your existing portfolio fits your investing blueprint, you should, among other things, identify your core investments.
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True. Your core investments will be the ones that are central to your portfolio.
4.
A 40-year-old should put how much money in stocks?
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The amount is a matter of personal preference, based on the investors goal for the money. The rule of thumb would suggest that 40-year-olds put 40% of their assets in cash/bonds and the remaining 60% in stocks. But those percentages may be inappropriate, depending on an individual investors goal. Asset allocation is a matter of personal preference.
5.
When its time to rebalance your portfolio, which is the most likely to happen?
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Youll probably have to increase your cash/bond position and decrease your stock position. Most of the time, stocks outperform cash and bonds. As a result, youll usually have to cut back your stock position when you rebalance.