As markets rise and fall, your original investment mix drifts. Rebalancing once or twice a year keeps risk in check.
Steps:
Compare current vs. target allocation.
Trim what’s grown too large and add to what’s lagged.
Harvest tax losses in taxable accounts when suitable.
Reinvest dividends thoughtfully.
Behaviorally, rebalancing enforces contrarian discipline—buying low, selling high, even when emotions argue otherwise.
One retiree told me, “Rebalancing felt scary until I realized I wasn’t abandoning winners—I was protecting peace.” Perfectly said.
Think of it as tidying your garden before winter—snipping excess growth so spring can thrive.