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Rebalancing is adjusting your investment portfolio back to your original target asset allocation.
In Depth
Over time, different investments grow at different rates, causing your portfolio's original asset allocation to drift. Rebalancing involves selling some of the investments that have grown significantly and buying more of those that have lagged. This process helps you manage risk and stay aligned with your long-term financial goals, ensuring your portfolio doesn't become too concentrated in one type of asset.
Example
If your target is 60% stocks and 40% bonds, but stocks have grown to 70% of your portfolio, rebalancing means selling some stocks and buying more bonds to get back to your original target.