Rebalancing means trimming the part of your mix that grew too big and topping up the part that shrank, to get back to the split you originally chose.
← From ZeroWhat it is Why it matters The numbers The trap Where you see it In one lineNext · 8.3A gain in dollars, nothing in euros
A mix left alone drifts as the fastest-growing part keeps growing, quietly taking on more risk than you originally chose, without you deciding that on purpose.
Start 50% shares, 50% bonds. Shares double, bonds stay flat: now it's about 67% shares, 33% bonds. Rebalancing sells some shares and buys bonds to get back to 50/50.
Rebalancing means selling the thing that's been rising, which feels wrong in the moment. It is not about predicting the future; it's about keeping the risk you originally chose.
Compare your current mix with your original plan once or twice a year. A gap of more than a few points is usually worth correcting.
Rebalancing keeps the risk you chose, by trimming what grew and topping up what shrank.
Do it today
Compare your mix with your plan.
Episode done · saved to your path