Rebalancing & Staying With the Plan

What this unit covers

See rebalancing as routine maintenance for your original plan, and why sticking with a plan matters more than reacting to every market move.

By the end you will be able to

• Explain how a portfolio's mix can drift away from its original plan without any single dramatic event.
• Describe rebalancing as restoring planned proportions, not predicting what comes next.
• Recognise the discomfort of trimming winners and topping up laggards as expected, not a warning sign.

How it starts: A Split That Quietly Moved

1. A year ago you split your savings 60 percent equity, 40 percent debt.
2. Today that split reads 66 percent equity and 34 percent debt.
3. Do you leave it as it is, or move some money back?

Words you will meet

Rebalancing

Selling part of what grew and adding to what lagged, to restore a portfolio's planned split.

Portfolio drift

The gradual change in a portfolio's mix as its parts grow at different rates.

In this module: Building Your Portfolio

1. Asset Allocation
2. Diversification Done Right
3. Position Sizing
4. Rebalancing & Staying With the Plan (this unit)