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Rebalancing – The Secret to Long Term Investing Success with Scripbox

Our focus at Scripbox has always been how to make otherwise complicated investment decisions and actions really easy for you. So, we reduce the number of mutual fund options to just 4, make investing a single click process, monitor your portfolio on an ongoing basis, recommend portfolio changes based on an annual review and help you change to the new portfolio with a single click!

With introduction of long term capital gains tax on equity mutual funds, this feature has been withdrawn because the cost of switching portfolios is not justified by the additional return.

Instead we have introduced "Tax efficient Withdrawal" which helps you minimise the cost of taxes on your withdrawals.

Our focus at Scripbox has always been how to make otherwise complicated investment decisions and actions really easy for you.

So, we reduce the number of mutual fund options to just 4, make investing a single click process, monitor your portfolio on an ongoing basis, recommend portfolio changes based on an annual review and help you change to the new portfolio with a single click!

After the annual review, you may be left with investments in one or more mutual funds that are no longer part of the Scripbox recommended portfolio. And the question that's in your mind is when you should exit those funds. The answer to that question is called Rebalancing and it may be the single most important thing for you to achieve long term investing success.

Rebalancing is the periodic process of exiting these funds and reinvesting the amount you get into the current set of funds.

Rebalancing would be really easy if that's all you had to do. But for best results, you need to ensure a few things:

  1. Make sure that you hold your funds for at least one year so you don't pay exit load and incur short-term capital gains.
  2. You allocate the funds appropriately while re-investing so your portfolio gets balanced across the current set of funds.
  3. You minimise the gap between withdrawal and re-investment to minimise the time when your money is not invested.

This can be quite a task, especially when you're busy. It could take you hours just to put the information together and then take action scheme by scheme. There's also the chance that you'll forget to re-invest the money after it comes into your account. There are also small procedural things like you can't withdraw less than 50 units or Rs 1000 (did you know that!)

Scripbox to your rescue

Our rebalancing algorithm takes care of all of the above considerations and all you have to do is follow the wizard. (if you don't like what the wizard suggests, you can always withdraw and invest as per your own liking).

Here's how the wizard works:

Login to your Scripbox account. You will see a notification alert - a bell icon on the right-side of your investment dashboard - indicating whether there are any eligible investments (in old funds) that you should rebalance (to currently-recommended funds). Click anywhere on "Click Here" to start the rebalancing wizard.

The wizard will take you through 3 screens. The first screen gives you a brief explanation of the process. Click "Start Rebalancing" to begin.

The second screen shows your holdings eligible for rebalancing. It gives you all the details like long-term holdings (on which you likely won't incur exit load), and the approximate amount you'll get when you withdraw from these funds. Click "Re-Invest" to continue.

The third screen shows how your money will be reinvested. You may notice different amounts in different funds. This is because our algorithm attempts to equalize the holdings across all funds after the re-investment (this is an investing best practice). You'll also notice that the reinvestment date is 10 working days later. This ensure that your money is safely in the bank before the investment instruction debits your bank. Click "Next" to continue.

Accept the investment terms and conditions by clicking "Confirm"

That's it you're done! Click on "Home" to go back to your investment dashboard.

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