FinTech Start-up Seeds: Rebalancing, Demographics, and Business

This report examines the concept of rebalancing in portfolio management, explaining its importance in maintaining asset allocation and maximizing investment returns. It uses an example to illustrate how rebalancing works, emphasizing the opportunity it presents for investors to sell high and buy low. The report then discusses the significance of age as a demographic factor for business start-ups, highlighting that while millennials often come to mind, entrepreneurs in their 20s to 40s are more willing to take the risk of business start-ups. The report also notes that older entrepreneurs are often more successful due to their experience, skills, and connections. The analysis draws on several research papers to support its findings and provide insights into FinTech start-up dynamics.

Running head: SEEDS OF FINTECH START-UP COMING FROM TRENCHES
SEEDS OF FINTECH START-UP COMING FROM TRENCHES
Name of the Student
Name of the University
Author Note

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SEEDS OF FINTECH START-UP COMING FROM TRENCHES
What exactly is “rebalancing” and why was there an opportunity here?
The process by which we can realign the weightage of a portfolio of assets is known
as rebalancing. It mainly involves the periodic buying and selling of assets in a portfolio so as
to maintain the original level of the asset allocation. Taking an example by assuming that the
original target asset allocation which was 50% of the stock as well as 50% of the bonds. It
has been found that the stocks has performed well and has increased to 70%. Therefore the
investor decides to sell few and get back to the target which was allocated of 50% of the
stock and 50% of the bond (Weale & Wieladek 2016). For most of the investors and
entrepreneurs, rebalancing should be done twice a year will be sufficient enough to make sure
that their assets which are allocated at a certain percentage are not getting out of whack.
Rebalancing is very important as because it helps a firm to gain maximum profits from the
investments. Rebalancing of stocks gives the investors an opportunity using which they can
sell very high and buy lower amount of stocks by taking the gains from the high performing
investments and again reinvesting them in areas where there is not much notable growth
(Kimball, Shumway & Zhang2018).
According to the article in portfolio management, rebalancing was an opportunity
there as because only due rebalancing periodic adjustments of the client holdings a large
number of the present bonds, stocks as well as the cash was assembled to meet the respective
goals whereas decreasing the taxes as well. Rebalancing was needed as because high priority
on incorporating was set along with the tax-saving strategies were set as well.
And what does this case illustrate about the second largest demographic for business
start-ups? Why might this be so?
It should be noted that the second most important factor for the business demographic
is age which does not play a very vital role as because it can be seen from the article that

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SEEDS OF FINTECH START-UP COMING FROM TRENCHES
there are many entrepreneurs who have started making business late in their age but still they
have moved ahead with their business apart from the millennial with start-up ideas dropping
out from Stanford University (Zhang 2015). The prime age for most of the entrepreneurial
start-ups generally pops up from the mind of the 20’s till the 40’s as because these people at
their age are most willing to take the risk of the business start-ups.
Aged people or the old entrepreneurs are almost knowledgeable and experienced
almost twice as likely to start few extremely successful company as of a 30- year old
entrepreneur as because it is very hard to develop a sound strategy with a very limited
experience. At a very young age it is very hard to make a smart move or a smart tactical
decision especially when it is needed to make a number of decisions each and every day
when someone is having a very limited experience. Science also proves that experience,
skills, connections and thoughts always depends on the age and experience gathered
(Karahan, Pugsley & Sahin 2016).

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SEEDS OF FINTECH START-UP COMING FROM TRENCHES
References
Karahan, F., Pugsley, B., & Sahin, A. (2016). Demographic origins of the startup deficit. In
Technical Report. New York Fed, mimeo.
Kimball, M. S., Shapiro, M. D., Shumway, T., & Zhang, J. (2018). Portfolio rebalancing in
general equilibrium (No. w24722). National Bureau of Economic Research.
Weale, M., & Wieladek, T. (2016). What are the macroeconomic effects of asset purchases?.
Journal of Monetary Economics, 79, 81-93.
Zhang, H., Zhang, H., & Zhang, J. (2015). Demographic age structure and economic
development: Evidence from Chinese provinces. Journal of Comparative Economics,
43(1), 170-185.