Lesson 2 of 4 · 4 min read
Rebalancing
How to keep your portfolio on course.
Why rebalance?
If stocks rise sharply, your 60/40 suddenly becomes 75/25 — more risk than you intended. Rebalancing brings it back.
How often?
1-2× per year, or when a category drifts 5%+ from your target. Rebalancing too often creates unnecessary costs and taxes.
Sell high, buy low
Rebalancing automatically forces you to sell the part that has risen and buy more of the part that has fallen — exactly the right reflex.
Remember this
- As prices rise, your mix drifts and your risk quietly grows larger.
- Rebalancing brings the split back to your target — and thus to your chosen risk.
- It automatically forces you to sell high and buy low.
- 1-2× per year (or at 5%+ drift) is enough; more often creates unnecessary costs.
There is a quiz for this lesson
2 questions that check whether it stuck. They live in the app, because a quiz nobody grades teaches nothing.
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