Video: Portfolio Rebalancing
Rebalancing is crucial to ensure that your investment portfolio remains appropriate for you.
Over time the risk in a portfolio can increases if it is not rebalanced as the asset allocation ‘drifts’ into higher risk assets.
Rebalancing your portfolio means reviewing your asset allocation and making sure it is still geared towards the returns you want to achieve.
Rather than accept the drift into higher risk, you might actually be better off accepting higher risk at the start and rebalance to ensure risk remains level.
Alternatively, assuming your investment portfolio had the 'right' level of risk for you at outset, rebalancing is vital to ensure that you do no end up with too high a risk portfolio.