Rebalancing
Periodically adjusting your portfolio back to its target mix of investments.
Rebalancing means buying and selling to return your portfolio to its intended asset allocation after market moves have shifted it. It enforces a disciplined 'buy low, sell high' habit and keeps your risk level in line with your plan.
Examples
- If stocks grow from 80% to 88% of your portfolio, you sell some to return to 80%.