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How to Rebalance Your Investment Portfolio
When and how to rebalance stocks and bonds — calendar, threshold, and tax-efficient strategies.
July 9, 20267 min readBy MyWealthForge
Key Takeaways
- 1Rebalance when allocation drifts 5%+ from target.
- 2Annual rebalancing is sufficient for most investors.
- 3Rebalance in tax-advantaged accounts to avoid capital gains.
- 4Sell winners, buy losers — disciplined buy low sell high.
Markets move — without rebalancing, a 70/30 portfolio can become 85/15 after a stock rally, adding risk you did not choose.
Set targets with asset allocation by age.
Rebalancing Methods
Calendar: rebalance once a year. Threshold: rebalance when any asset class drifts 5%. Contribution: direct new money to underweight asset.
Tax-Efficient Rebalancing
Rebalance in 401(k) or IRA first. In taxable accounts, use tax-loss harvesting.
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