Glossary
Rebalancing: meaning, example and why it matters
Periodically adjusting a portfolio back toward your chosen mix, for example trimming a holding that has grown to dominate it. It is a way to control concentration risk, and tax and costs can apply when you sell.
Worked example
A 60 / 40 equity-debt portfolio starting at ₹6,00,000 and ₹4,00,000 grows to ₹7,50,000 equity and ₹4,00,000 debt, total ₹11,50,000, with equity at 65%. Returning to 60% means equity of ₹6,90,000, so ₹60,000 moves from equity to debt.
Illustrative numbers for explanation only. They are not market data, a forecast or a suggestion.
Why it matters
Rebalancing keeps the risk of the mix close to the one you chose, since winners grow into a larger share over time.
Related terms
See it in practice
Frequently asked questions
How often should I rebalance?
There is no single answer. Some people rebalance on a schedule, others when a holding drifts a set distance from its target. Costs and taxes also matter.
Is this page investment advice?
No. Rebalancing is explained in general terms with illustrative numbers. Market Dekho is not a SEBI-registered Research Analyst or Investment Adviser.
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Educational content, not investment advice. Market Dekho is not a SEBI-registered Research Analyst or Investment Adviser. Spotted a mistake? Email marketdekho01@gmail.com.