Maybe also paying back first what we took from 2nd pillar?
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If you have a mortgage and invest in the stock market, your total portfolio is leveraged. So basically you would more than 100% in stocks. Just be sure, that you are aware of this.
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You are leveraged yes, but not more than 100% in stocks necessarily.
Example:
You bring 20% equity and borrow 80% via morgage.
You have the same amount as the downpayment in stocks. So before that your portfolio was 50% downpayment and 50% stocks. Now you borrow 250%.
Now your portfolio is:
50% home equity
/+ 250% home equity -250% loan
50% stocks
Come on, people! You are only confusing things. Yes, there is a place to live, a mortgage on it, 2nd pillar; but it is obvious that OP meant the rest of the own wealth.
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If you buy shares in an ETF that tracks an index, the ETF would handle rebalancing.
If you manage your own stock portfolio, I believe some amount of rebalancing is necessary because a lot can happen over time (a business model can become obsolete or a company can go bust, etc.).
As far as 100% stocks goes, if you take historical data as a guide, there would be no reason not to have a 100% stock portfolio if:
- Your portfolio is properly diversified.
- You plan to hold your investments long-term (e.g. 20 years or more).
Bonds are important if you will invest for shorter terms (to balance the risk), or if you need a steady income stream.
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This is incorrect, obviously
Rebalancing works best with negatively correlated assets.
They tend to be rare, those who find them keep mum about it, and so you won’t hear of it until after they’ve stopped working.
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