Editing 1course Stock Market (section)

== Why Monitoring and Rebalancing Matter ==

=== 1. Maintain Your Desired Asset Allocation ===
Over time, the value of your investments will change at different rates. Monitoring and rebalancing help you maintain your desired asset allocation, which is crucial for managing risk and meeting your investment goals.

=== Example: If your target allocation is 60% stocks and 40% bonds, but stocks outperform and now represent 70% of your portfolio, rebalancing will bring you back to your original allocation. ===

=== 2. Manage Risk ===
Regularly monitoring your portfolio helps you stay aware of your overall risk exposure. Rebalancing reduces the risk of becoming overly concentrated in one asset class, sector, or geographic region.

=== Example: If your technology stocks have grown significantly, rebalancing ensures you don’t become overly exposed to the tech sector’s volatility. ===

=== 3. Take Advantage of Market Opportunities ===
Rebalancing allows you to sell high-performing assets and buy undervalued ones, potentially enhancing your returns over time.

=== Example: If your bonds have underperformed while stocks have surged, rebalancing involves selling some stocks to buy more bonds at lower prices. ===