Portfolio Basics · Financial education
What Is Portfolio Rebalancing?
Quick answer: Rebalancing means adjusting portfolio weights after market movements or changes in goals and circumstances.
Understand the core concept
If one asset category rises faster than others, it can become a larger portion of the portfolio and change the overall risk profile.
See how it works
Approaches may use calendar intervals or predetermined deviation thresholds. Rebalancing need not mean trading constantly.
Know the limitations
Transactions can introduce taxes, fees and spreads, so the decision should account for costs and personal constraints.
Put it into context
Rebalancing is a risk-management practice, not a guarantee of superior returns.
Try this yourself
Calculate how a fictional 60/40 mix changes when the first category rises by 20% and the other is flat.
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Check the original sources
Investor.gov education · SEC EDGAR company filings · FINRA Investor Insights
Educational material, not personal financial or trading advice. Initial publication: October 8, 2026. This article is not a substitute for checking current broker rules or company disclosures.