DIY Simple Investing: A Guide to Simple but Effective Low Cost Investing by John Edwards

Author:John Edwards [Edwards, John]
Language: eng
Format: azw3
Published: 2015-05-31T16:00:00+00:00

Example : Say you decide upon a classic mix of 60% equities and 40% bonds for your portfolio asset allocation. The initial investment is £10,000 so you have £6,000 invested in stocks & shares and £4,000 in government bonds. It is a good year for shares and by the end of year 1, the value of the equities have increased to £8,000. Its not such a great year for bonds and the value for them remains unchanged at £4,000.

This means your total portfolio has risen in value due to the equities and is now worth £12,000. The allocation has changed from 60:40 to become 67% equities and 33% bonds. It is out of balance from your starting allocation.

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