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Rebalancing Portfolio – Practical Demo

Rebalancing Your Investment Portfolio

📊 Rebalancing Your Portfolio

Maintain your target asset allocation by reviewing your portfolio annually.

🔁 What is Rebalancing?

Rebalancing means adjusting your investments to maintain your original asset allocation—like 60% equity and 40% debt—especially after market movements skew the ratios.

📅 Annual Check-Up Method (Example)

Original plan: 60% Equity, 40% Debt
Let’s assume ₹1,00,000 invested in Jan 2024

Asset Initial (₹) % Allocation Value After 1 Year (₹) New % Allocation Action Needed
Equity 60,000 60% 72,000 66% Sell ₹6,000
Debt 40,000 40% 42,000 34% Buy ₹6,000
Note: Equity overperformed, so sell excess and move into debt to bring portfolio back to 60:40.

✅ Steps to Rebalance Your Portfolio

  1. Check current values of all investments annually
  2. Calculate current % allocation of each asset class
  3. Compare with your target allocation (e.g., 60:40)
  4. Sell/buy units to bring it back to the target
💡 Pro Tip: Rebalancing helps you "buy low, sell high" in a disciplined way!
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