
Rebalancing the Mix
Original Allocation: For example, you may have decided to allocate 60% of your portfolio to stocks, 35% to bonds and 5% to cash investments.
Out of Balance: If market activity causes the value of your stocks to decrease, you’ll have a smaller percentage invested in stocks, leaving you with less growth potential.
Rebalanced: Rebalancing—selling bonds and cash investments and buying more stocks—gets you back to your original 60/35/5 mix.