How to Rebalance Your Portfolio (and Why It Matters)

Intro

When you invest, your portfolio doesn’t stay the same forever. Some assets grow faster than others, and before you know it, your “balanced” portfolio is out of balance. That’s why rebalancing matters: it keeps your investments aligned with your goals and risk tolerance.

👉 As an advisor, I tell clients that rebalancing is like a financial tune-up — it keeps everything running smoothly.

🧾 What Is Portfolio Rebalancing?

• Adjusting your investments back to your original target allocation.

• Example: If you wanted 70% stocks and 30% bonds, but stocks grew and now it’s 80/20 → you rebalance back.

✅ Why Rebalancing Matters

• Controls risk: Prevents being overexposed to one asset class.

• Locks in gains: Sell some winners, buy laggards.

• Keeps you disciplined: Stops emotions from driving decisions.

👉 I like rebalancing because it forces you to “sell high, buy low” — something most investors struggle to do emotionally.

📅 How Often Should You Rebalance?

• Annually: A simple once-a-year adjustment works for most.

• Threshold-based: Rebalance when allocations drift more than 5–10%.

• Robo-advisors: Many do it automatically in the background.

Final Thoughts

Rebalancing isn’t about timing the market. It’s about sticking to your plan and keeping your portfolio aligned with your risk tolerance.

👉 In my opinion, rebalancing once or twice a year is enough for most investors — no need to overcomplicate it.