"Rebalancing involves selling assets that have appreciated the most and using the proceeds to shore up assets that have lagged. This brings your portfolio's asset mix back into balance and enforces the discipline of selling high/buying low. Rebalancing doesn't necessarily improve your portfolio's returns, especially if it means selling asset classes that continue to perform well. But it can be an essential way to keep your portfolio's risk profile from climbing too high."
"If it's been a while since your last rebalance, your portfolio might be heavy on stocks and light on bonds. A portfolio that started at 60% stocks and 40% bonds 10 years ago could now hold more than 80% stocks. Another area to check is the mix of international versus U.S. stocks. International stocks have led in 2025, but that followed a long run of outperformance for U.S. stocks, so your portfolio might lack international exposure."
Target asset allocations drift as markets fluctuate, potentially increasing equity exposure in bull markets or reducing it in declines. Rebalancing requires selling assets that have appreciated and buying assets that lag to restore the intended mix and maintain the portfolio's risk profile. Rebalancing enforces the discipline of selling high and buying low but may not improve returns if outperforming asset classes are sold. Investors should check equity regional mix and style exposures—such as U.S. versus international stocks, growth versus value—and specialized holdings like gold or bitcoin. Rebalancing decisions should consider overall portfolio allocations and tax efficiency, favoring tax-deferred accounts when possible.
Read at Fast Company
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