How to rebalance your investment portfolio.

If you're like most people, you have a portfolio that includes a mix of stocks, bonds, and cash. But over time, that mix can get out of balance. For example, let's say you originally allocated 50% of your portfolio to stocks and 50% to bonds. But after a strong stock market run, your portfolio might now be 60% stocks and 40% bonds. That's not necessarily a bad thing. A portfolio that's slightly out of balance may still be well diversified and able to meet your long-term goals. But if you're not comfortable with the new mix, or if you want to make sure your portfolio remains diversified, you may need to rebalance. Rebalancing means selling some of your assets that have increased in value and using the proceeds to buy more of the assets that have lost value, bringing your portfolio back to its original allocation. For example, let's say you want to rebalance your portfolio so that it's once again 50% stocks and 50% bonds. To do that, you would sell some of your stock holdings and use the proceeds to buy more bonds. Rebalancing can be a simple way to help keep your portfolio on track. And it can also help you take advantage of market conditions. When prices are low, rebalancing allows you to buy more assets at a discount. And when prices are high, rebalancing allows you to sell some of your assets and lock in your gains. Of course, there are some drawbacks to rebalancing. For one thing, it can be time-consuming. You'll need to keep an eye on your asset mix and make sure you're taking action when your portfolio gets out of balance. And rebalancing can also be costly. Every time you sell an asset and buy another, you may have to pay fees or commissions. And if you're selling assets that have appreciated in value, you may also have to pay taxes on your gains. For these reasons, it's important to consider the costs and benefits of rebalancing before taking action. If the costs outweigh the benefits, then rebalancing may not be the right move for you. But if the benefits outweigh the costs, then rebalancing can be a simple and effective way to keep your portfolio on track.