Rebalancing portfolio regularly helps maintain desired asset allocation from "summary" of All About Asset Allocation, Second Edition by Richard Ferri
Regularly rebalancing your portfolio is crucial in ensuring that your desired asset allocation is maintained. This process involves periodically reviewing your investments and making adjustments to bring them back in line with your target allocation. By rebalancing, you are essentially selling assets that have performed well and buying assets that have underperformed, in order to maintain the desired balance between different asset classes. The main goal of rebalancing is to keep your portfolio aligned with your risk tolerance and investment objectives. Over time, the performance of different asset classes can cause your portfolio to drift away from your desired allocation. For example, if stocks have a strong performance, they may come to dominate your portfolio and increase its overall risk level. On the other hand, if bonds underperform, they may make up a smaller portion of your portfolio than intended, redu...
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