Plain-English definitions, reviewed by an independent investor
Rebalancing
Rebalancing resets a portfolio back to its target weights by trimming winners and adding laggards.
Rebalancing resets a portfolio back to its target weights by trimming winners and adding laggards.
(Buy low, sell high vs the plan, on a schedule)
Why it matters
It enforces the discipline of selling high and buying low.
Common confusion
Too often racks up taxes and fees; too rarely lets drift blow up risk.
Frequently Asked Questions
How often rebalance?
On a schedule (e.g. yearly) or when a weight drifts past a band.
Why bother?
It keeps risk where you intended instead of wherever the market drifted.