Definition

Over time, the better-performing assets grow to occupy a larger share of a portfolio, drifting it away from the intended risk level. Rebalancing sells some of what grew and buys what lagged to restore the target allocation, typically once a year. It enforces a disciplined "sell high, buy low" habit and keeps risk where you set it.

1. How and When to Rebalance Your Portfolio

   Portfolio drift is inevitable. Rebalancing is the discipline of bringing your allocation back in line — selling what has grown and buying what has lagged. Here is how to do it without overcomplicating it.
   investing

1. Asset Allocation

   How your portfolio is divided among stocks, bonds, and other assets.
2. Diversification

   Spreading money across many investments so no single loss sinks you.
3. Volatility

   How much an investment's price swings up and down over time.