Rebalancing
The act of selling assets that have grown beyond your target weight and buying ones that have lagged, to bring your portfolio back to its intended mix. Usually done annually or when allocations drift more than 5%. Mechanically forces you to sell winners and buy losers — counterintuitive but historically rewarding.
If your target is 60/40 and stocks rally to 70/30, rebalancing means selling some stocks to buy more bonds.
Trade-offs
Risk
The chance that an investment loses value — and how much it could lose.
Read →Volatility
How wildly an investment's price moves up and down. High volatility = bigger swings.
Read →Diversification
Spreading money across many different things so no single one can sink you.
Read →Bull & bear market
Long stretches of rising prices (bull) or falling prices (bear). Both end, eventually.
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