Rebalancing means bringing your equity/debt (and sub-category) weights back to target. Bull markets make you accidentally aggressive; bear markets make you accidentally conservative. Rebalancing is how you stay honest to the plan.
Two clean methods
Calendar vs threshold rebalancing
| Method | How it works | Best for |
|---|---|---|
| Calendar | Review every 6–12 months | Most DIY investors |
| Threshold | Rebalance when allocation drifts by X% | Investors who want rules |
| Cash-flow | Direct new SIPs to underweight sleeves | Tax-aware maintenance |
- Prefer topping up underweight assets with new money when possible.
- Avoid weekly tinkering.
- Document targets so you are not renegotiating with fear.
Conclusion
Rebalance on a schedule or a threshold—then stop. The point is controlled risk, not constant activity. A portfolio that is slightly imperfect but followed beats a perfect spreadsheet you abandon.