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What is rebalancing? How does it help me?

With introduction of long term capital gains tax on equity mutual funds, this feature has been withdrawn because the cost of switching portfolios is not justified by the additional return.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


Rebalancing is the periodic process of exiting funds we no longer recommend and reinvesting the amount you get into the current set of funds. 

Background

Our focus at Scripbox has always been how to make otherwise complicated investment decisions and actions really easy for you. To do this, we:

  • reduce the number of mutual fund options to just 10 (4 long-term, 3 short-term, 2 tax-saving and 1 emergency fund)

  • make investing a single click process

  • monitor your portfolio on an ongoing basis

  • recommend portfolio changes based on an annual review

  • 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. Rebalancing is the systematic process to decide when to exit those funds. This may be the single most important thing for you to achieve long term investing success. 

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

  • Hold your funds for at least one year so you don't pay exit load and incur short-term capital gains taxes

  • Allocate funds appropriately while re-investing so your portfolio gets balanced across the current set of funds.

  • 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 fund  by fund. 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 (set by the mutual fund companies) e.g. you can't withdraw less than 50 units or Rs 1000 in a single transaction.

Our rebalancing algorithm takes care of all of the above considerations and all you have to do is follow our wizard. (If you don't like what the wizard suggests, you can always withdraw and invest as per your own liking). With a few clicks, we help you rebalance your portfolio and always stay current with our currently recommended basket of funds.


Hope we helped! Why not get started with your Scripbox.
If you need further assistance please feel free to reach us at 1800-200-1265