Rebalancing

Rebalancing refers to the process of adjusting the proportions of different assets in an investment portfolio to maintain a desired risk level and investment strategy. Over time, as some investments perform better or worse than others, the original balance can shift. For example, if stocks rise significantly, they may represent a larger share of the portfolio than intended. Rebalancing involves selling some of the outperforming assets and buying more of the underperformers to restore the original balance. This helps manage risk and ensures that the portfolio aligns with the investor's goals and risk tolerance.