KEY TAKEAWAYS:

Market shifts can push portfolios far from target allocations over time.

Rebalancing helps control risk by selling appreciated assets and strengthening weaker areas.

Investors should prioritize adjustments in tax-deferred accounts to avoid capital gains .

New contributions, RMDs , and loss harvesting can all support rebalancing efforts.

If you’ve chosen a target asset allocation —the mix of stocks, bonds, and cash in your portfolio— you’re probably ahead of many investors. But unless you’re investing in a set-and-forget investment option like a target-date fund, your portfolio’s asset mix will shift as the market fluctuates. In a bull market you might get more equity exposure than you planned, or the reverse if the market declines.

Rebalancing involves selling as

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