Capital Allocation – Part 2
In part 1, we saw a simple method to reallocate funds at the end of every trading year but in this method, we are going to dive a little deep and be more aggressive. I say “aggressive” because this plan doesn’t wait for a year to rebalance and that’s exactly why this way of fund management gives better returns compared to the previous one.
In this method, compounding effect comes much faster which grows our portfolio exponentially. Here are the steps for those who want to speed up their returns by using plan 2.
- Divide your capital into multiple strategies and start trading.
- Once it doubles, then immediately reshuffle your entire portfolio with fresh allocation.
- Continue till this new capital doubles again. And, Repeat.
Finally, whatever method you choose, remember that you need to stick to that plan and you can not keep switching between these two methods.
Here’s the link to plan 2 of fund management for both ISS and PDR strategies
