Portfolio rebalancing
Markets move, and so will your portfolio. Rebalancing ensures your investments stay aligned with your goals and risk tolerance. This guide explains why rebalancing matters, how to do it, and practical strategies to keep your portfolio on track.
What is rebalancing?
It’s the process of adjusting your portfolio to restore your target asset allocation after market fluctuations. Without it, your portfolio may become riskier or more conservative than intended.
How to apply it:
- Set a target allocation for each asset class
- Decide on periodic or threshold-based rebalancing
- Use tools to monitor allocation automatically
Why rebalancing is important
Rebalancing helps maintain the right level of risk, encourages discipline, and reduces emotional investing decisions.
Key takeaways:
- Encourages “buy low, sell high”
- Prevents over-concentration in one asset class
- Keeps risk consistent over time
How to rebalance your portfolio
- Periodic: Review quarterly or annually
- Threshold: Adjust when allocations drift beyond a set band
- Soft rebalancing: Direct new contributions toward underweight assets
Pro tips:
- Avoid over-trading to reduce fees and taxes
- Consider automated rebalancing tools
- Document your process for consistency
We don’t offer financial advice, seek independent advice if needed.
Capital at risk. All investing should be long term. The value of your investments can go up and down, and you may get back less than you invest.
Tax treatment depends on individual circumstances and may be subject to change in the future.