Rebalancing is returning your portfolio to its target weights. Prices drift every day, so yesterday's 25/25/25/25 quietly becomes 31/27/24/18 — more of the winners, less of everything else. Rebalancing sells some of what grew and tops up what shrank, mechanically.
What it actually does
- Controls risk — without it, a hot position swells until it IS your portfolio, and its next drawdown is yours.
- Enforces discipline — the schedule decides, not the mood of the moment. It's the anti-panic device.
- Trims concentration for free — a light, rule-based contrarian nudge (sell a little high, add a little low) with no forecasting involved.
The frequency trade-off
Every rebalance costs spreads and fees. Daily is expensive noise-chasing; never means risk drifts unbounded. Monthly is the classic middle ground for signal-driven strategies: frequent enough to keep weights honest and act on new rankings, rare enough that costs stay small. That's the cadence every strategy on this site uses — one decision per month, published as a model-portfolio update, with the costs charged inside the track record.
Weights drift between updates — and that's fine
Between monthly updates our published weights drift with prices, exactly as they would in a real account; the backtest models it the same way (documented in the methodology). What matters is the rule: same schedule, same math, no exceptions — see it live in Balanced Duo.
Educational material — not investment advice.