Why rebalance?
Over time, what grows faster takes a bigger share of the portfolio and changes your risk. Rebalancing brings it back to your targets. Buying only, with new money, avoids selling and paying taxes in a taxable account.
Example
$60,000 in stocks, $25,000 in bonds and $5,000 in real estate funds, with a 60/30/10 target and $5,000 to invest: put about $2,188 in bonds and $2,813 in real estate funds.
Frequently asked questions
How often should I rebalance?
Many investors do it once a year, or when a class drifts more than 5 percentage points from its target.
See also
Results are estimates for information only and are not financial, legal or medical advice. Rates, taxes and fees vary — confirm with a professional or your lender.