Portfolio Rebalancing: How to Keep Your Investments on Track

When you invest, your portfolio rebalancing, the process of adjusting your investments to maintain your original asset mix. Also known as asset allocation reset, it’s not about chasing hot stocks—it’s about staying calm when markets swing. Think of it like tuning a guitar: even the best strings go out of tune over time. If you started with 60% stocks and 40% bonds, a strong stock market might shift that to 75% stocks and 25% bonds. That’s not your plan anymore—it’s a riskier bet than you intended.

Without rebalancing, your portfolio drifts. That’s why it’s not optional—it’s a basic safety feature. The asset allocation, how you divide your money across different types of investments like stocks, bonds, and real estate you chose at the start was based on your goals, timeline, and comfort with risk. When one part grows too fast, it pulls your whole portfolio out of balance. That’s where risk management, the practice of controlling exposure to losses while still aiming for growth kicks in. Rebalancing brings you back to your target. It’s not about timing the market. It’s about sticking to your plan when emotions want you to do the opposite.

You don’t need fancy tools to do it. Many people rebalance once a year, or when any asset class moves more than 5% from its target. Some use automated tools from brokers that do it for them. Others sell a bit of what’s grown too big and buy more of what’s fallen behind. It’s simple, but it works. And it’s not just about stocks. If you’ve got ETF tax lot management, a strategy to choose which shares to sell first to minimize taxes in your mix, rebalancing ties into it—selling the right lots can save you money while resetting your weights.

What you’ll find in this collection isn’t theory. It’s real advice from people who’ve been there. You’ll see how to handle rebalancing when you’re holding real estate through REITs, how to avoid tax traps when selling assets, and why even small adjustments can make a big difference over time. You’ll also learn why some investors skip rebalancing altogether—and why that’s usually a mistake. There’s no magic formula. But there are clear, proven steps that help you sleep better at night, even when markets are wild.