Portfolio rebalancing helps mitigate the impact of the common mistakes investors make, according to a new study published in the US Journal of Financial Planning .

“It appears that the forced discipline of portfolio rebalancing, with a significant allocation to stocks, can help investors achieve long-term investment goals and help investors avoid behavioural investment mistakes,” say authors Steven Beach, an assistant professor of finance and Clarence Rose, a professor of finance at the College of Business and Economics at Radford University in Virginia.

The study identified three common behavioural issues that result in investors chasing p...