Portfolio Rebalancing: Keeping Your Investments on Track

Written by: Michelle (she/her)

2 min read | Published: September 24, 2026

A person's hand holds a phone displaying a line graph and numerical values listed on the bottom

Portfolio rebalancing is the process of adjusting your investments to bring them back to your preferred mix, also known as your asset allocation.

For example, you may invest 60% in higher-risk stocks and 40% in lower-risk bonds. If your chosen stocks perform well over several years, your portfolio mix might eventually become 70% stocks and 30% bonds.

While seeing your investments grow like this can be exciting, your portfolio might end up carrying more risk than you originally planned or become overly concentrated in one type of investment. When you rebalance your portfolio, you’re restoring your target allocation and bringing it back to your preferred risk level. This helps keep your portfolio aligned with your original goals and investment strategy.

Rebalancing can also come into play if your investment goals shift or life circumstances change. Whether you’re responding to changes in your own goals or simply maintaining your original investment strategy, rebalancing encourages you to stay focused on long-term objectives rather than chasing whichever investment has performed best recently.

How can I rebalance my portfolio?

There are several ways to rebalance a portfolio. Rebalancing can involve selling investments that have grown beyond your target allocation, buying investments that have now become a smaller portion of your portfolio, or directing new contributions toward those underrepresented investments.

When it comes to how often you should rebalance your investments, there isn’t a one-size-fits-all approach, and you may determine what frequency is most appropriate for your financial situation. Some investors review their portfolios on a regular schedule, such as once or twice a year. Other investors only rebalance when their investments drift away from their target allocation significantly. Some investors also choose not to rebalance at all, allowing their investment allocation to change over time.

Is rebalancing right for me?

As markets change, it's normal for your portfolio to change with them. The right approach to managing your portfolio depends on your financial goals, investment strategy and comfort with risk. Instead of reacting to every market movement, rebalancing is about periodically checking that your investments still reflect the strategy and goals that work for you.

One important consideration is that portfolio rebalancing doesn't guarantee higher returns or protect against investment losses. Also, depending on your account type, buying and selling investments may involve transaction costs or additional tax considerations.

If you're unsure whether your portfolio needs rebalancing, you may consider speaking with a financial professional to determine an approach that best fits your financial goals.