QUESTION: Rebalancing: what is rebalancing and why is it needed?

Rebalancing an investment portfolio is the regular process of returning the shares of various assets to their initial target values. The need for this procedure is driven by the natural change in the market value of securities, which inevitably distorts the portfolio structure over time.

The rebalancing process should begin with setting a clear financial goal in figures and specific timeframes. Determine what level of risk is acceptable to you and fix the desired ratio of stocks, bonds, real estate, and other instruments.

Then, break down the general task into small practical steps and incorporate them into your personal budget. It is recommended to review your investment plan approximately once a month in order to spot significant deviations in a timely manner and make well-considered decisions.