What is Rebalancing?
Adjusting your portfolio back to your target allocation
Full Explanation
Over time, winning investments grow to dominate your portfolio. Rebalancing means selling some winners and buying more of the underperformers to get back to your original target mix. It forces you to sell high and buy low automatically.
Real-World Example
Target: 70% stocks, 30% bonds. Stocks rally → now 85/15. Rebalance by selling stocks and buying bonds.
Pro Tip
Rebalance once or twice a year, not every week.
Related Strategies Terms
Index Investing
Buying funds that track the whole market instead of picking stocks
Dividend Growth Investing
Investing in companies that consistently grow their dividend every year
Contrarian Investing
Buying what everyone else is selling, and selling what everyone is buying
Swing Trading
Holding stocks for days to weeks to capture medium-term moves
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