What Is Portfolio Rebalancing?
Portfolio rebalancing is the process of realigning the weightage of your investment assets to match your original target allocation.
Let’s say you started with:
🟢 60% in equity
🟡 30% in debt
🟠 10% in gold
Over time, equity markets may surge and turn this into:
🟢 75% equity
🟡 20% debt
🟠 5% gold
This shift increases your risk profile unintentionally. Rebalancing brings your portfolio back in line with your financial goals and risk tolerance.
Why Rebalancing Is a Must in 2025
✅ Controls Risk
You prevent overexposure to a single asset class (like equity) and avoid unnecessary volatility.
✅ Locks in Gains
Sell high-performing assets and reinvest in underperforming ones. It’s the opposite of panic-selling.
✅ Keeps You Goal-Oriented
Your portfolio stays aligned with long-term goals like retirement, home buying, or your child’s education.
✅ Protects You in Market Corrections
By regularly booking profits and diversifying, you create a natural cushion against market crashes.
How Often Should You Rebalance?
Annually (Best for most investors)
Semi-Annually (Ideal if your portfolio is large or market is volatile)
Threshold-Based (Rebalance if asset mix deviates by 5% or more)
🧠 Tip: Set a calendar reminder every year—“Review & Rebalance Portfolio”.
Manual vs Automated Rebalancing
| Method | Manual | Automated |
|---|---|---|
| Control | High | Medium |
| Effort | High | Low |
| Tools | Excel, brokerage platforms | Robo-advisors, Vizzve Tools |
| Ideal For | DIY investors | Busy professionals or first-time investors |
Steps to Rebalance Your Portfolio
Review your target allocation (e.g. 60:30:10)
Check current portfolio mix
Identify over- and under-weighted assets
Buy/Sell to restore original allocation
Repeat yearly or when major life events occur
Real-Life Example:
You planned: ₹6L equity, ₹3L debt, ₹1L gold (60:30:10)
Current: ₹8L equity, ₹2L debt, ₹1L gold (Shifted to 72:18:10)
✅ Action: Sell ₹1.2L equity and move ₹1L to debt, ₹20K to gold
Rebalancing brings it back to original risk level while locking in gains.
When Should You Definitely Rebalance?
🏡 After a big life event (marriage, house purchase, child’s birth)
📉 After a market crash or rally
💼 Change in job or income level
🎯 Major goal achieved or revised
FAQs
1. Does rebalancing reduce returns?
No. In fact, it may improve long-term returns by reducing volatility and locking in profits.
2. Will I have to pay taxes?
Yes, selling equity may attract capital gains tax. But you can minimize this with tax harvesting or goal-aligned withdrawals.
3. Can I rebalance SIP portfolios?
Yes. Either stop/restart SIPs in underweighted funds or add fresh investments to underperforming assets.
4. How do I automate rebalancing?
Platforms like Vizzve, Zerodha, or Groww now offer robo-advisory rebalancing tools.
Final Word: Rebalancing = Financial Fitness
Your portfolio is like your health. You don’t wait until something goes wrong—you maintain it consistently.
📊 “Rebalancing isn’t just about profits. It’s about discipline and peace of mind.”
Vizzve Can Help You Rebalance Right
With Vizzve’s investment tools:
Track asset allocation automatically
Get rebalancing alerts
Use our one-click rebalance feature
Get help from expert advisors
Plan with your goals in mind, not just returns
🔁 Ready to rebalance? Start with us today.
Published on : 26th July
Published by : SMITA
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