The Rebalancing Habit

Over time, your portfolio drifts. If stocks have a great year, your 60/20/20 split might suddenly look like 70/18/12. Rebalancing means selling some of what grew and buying more of what did not, returning to your target allocation. Do this once or twice a year — not more. Some brokerages offer automatic rebalancing. It feels counterintuitive to sell your winners, but rebalancing forces you to buy low and sell high systematically. That is exactly the discipline most investors lack.