Rebalancing basics

Simple explanation

Over time, your portfolio drifts. Stocks grow faster than bonds, so a 70/30 mix can quietly become 85/15 — and your risk rose without you noticing. Rebalancing brings it back.

Picture this

Tuning a guitar back to harmony when the strings drift. Same instrument. Better sound.

— Byte

Real example

You started 70% stocks / 30% bonds. Two great years later: 85% / 15%. You sell some stocks and buy bonds until it's 70/30 again. Once a year is usually enough.

Common mistake

Never rebalancing — letting one winner take over your portfolio until a crash wipes most of it out.

Quick check

Takeaway

Once a year, take 5 minutes. Bring your portfolio back to its target mix.

Related glossary terms