investing-concepts

Rebalancing

Rebalancing is adjusting your portfolio back to target asset weights.

Explanation

Over time, winners can dominate your portfolio and increase risk. Rebalancing restores your original plan and helps maintain consistent risk exposure.

Example

If equities rise from 60% to 70% of your portfolio, rebalancing may involve selling some equities and adding bonds.

Related Terms

Asset Allocation Diversification

Related content

Glossary

Asset Allocation

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Diversification

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Portfolio Diversification: Reduce Risk Without Guessing the Market

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