Five things to know about rebalancing:
- Reasons to rebalance
- How to rebalance a pie
- How to rebalance an entire portfolio
- Dynamic rebalancing
- M1 automatically rebalancing portfolio
Reasons to rebalance
Rebalancing returns your portfolio to the target percentages you set.
As prices of securities change over time, your initial target allocations may drift. This might result in a portfolio that no longer aligns with your investing style.
Rebalancing allows you to reallocate funds to keep your portfolio in line with your financial goals.
Potential Tax Implications
Any time you rebalance your portfolio you may initiate buys and sales of stocks.
Sales of securities may carry tax implications which you should always consider before making the decision to rebalance.
How to rebalance an entire portfolio
1. Navigate to the Portfolio you would like to rebalance. Select the “Rebalance” button
2. Select “Confirm”
1. Navigate to the Portfolio you would like to rebalance
2. Tap “Manage Pie” and “Rebalance”
3. Select “Confirm”
This will rebalance all Pies within your portfolio.
How to rebalance a Pie
1. Navigate to the specific Pie you would like to rebalance
2. Select the “Rebalance” button
3. Select “Confirm”
This will rebalance that specific Pie within your portfolio.
If your portfolio is made up of several Pies, the Pies will be brought to their target percentages, but the Slices within those Pies will likely remain under or overweight.
With M1's Dynamic Rebalancing, every trade with new cash in your portfolio pushes you closer to the target percentages you set.
That means you can invest cash into your Pie and maintain your investment targets without any manual calculations.
Whenever your account makes new trades, the algorithm identifies slices that are most relatively underweight and puts money in those first.
When removing cash from a portfolio, the algorithm identifies slices that are most relatively overweight and removes money from those first.
M1 automatically rebalancing portfolio
M1 will never initiate a rebalance of your portfolio without your instruction.
If you want your holdings to match your target portfolio, you will have to initiate a rebalance manually.
If you have further questions, please contact us.