Investing is not only about choosing the right assets, but also about regularly reassessing and adjusting them according to the current situation. One of the most important steps in managing an investment portfolio is rebalancing. This process involves adjusting the asset allocation in the portfolio to restore the original investment plan, which helps minimize risk and maximize potential returns.

Rebalancing is necessary not only to maintain a proper risk allocation, but also to optimize returns. For example, if you start with a goal of having 60% stocks and 40% bonds in your portfolio, the growth of one asset class may cause the ratio to shift over time and no longer match your original intent. Stocks may grow faster than bonds, which would result in a higher risk exposure than you originally planned. By rebalancing, you sell some of the stocks that have increased in value and buy bonds, restoring your original allocation and reducing risk.

One of the reasons why rebalancing is key is…