™If stocks rise from a 60% target to 70% of a portfolio, rebalancing can restore the target mix; tax, cost and tolerance rules matter.
Risk & Portfolio
Rebalancing
Returning a portfolio toward its intended allocation by buying or selling holdings.
Plain-English context
Put the definition to work.
The target allocation must be justified first; mechanically restoring it can create taxes and costs or ignore changed circumstances.
Further reading and verification. Examples are hypothetical, not current quotes or recommendations. Product terms, tax treatment and market rules can change. Investor.gov — asset allocation and diversification