Optimal Finance Daily · Sunday, August 30, 2026
Steve Pavlina advises on the importance of rebalancing investment portfolios over time. He explains that as different asset classes grow at varying rates, their percentages in a portfolio will drift, necessitating adjustments to maintain the desired asset allocation. Rebalancing involves moving funds from underperforming to overperforming assets or vice versa to manage risk and lock in gains.
“Over time, these percentages will drift as each bucket grows at a different rate, so you need to rebalance them.”
“When your riskier investments lose money, rebalancing means transferring money out of your equity bucket to get back in the game and try again.”
“And when your riskier investments pay off big, rebalancing means transferring money back to your equity bucket to lock in your gains.”