It Doesn't Matter How You Rebalance, Just That You Do
Periodically rebalancing your portfolio is a necessary task for investors. Rebalancing a portfolio is the act of selling some assets and buying others in order to maintain a target asset allocation. Maintaining your asset allocation will reduce volatility, providing more predictable returns. That way you can ensure you're money's there when you need it.
There are a few ways to decide when and how to rebalance. You can do it on regular intervals, most commonly every year. Or you may wait until your allocations reach upper or lower bounds, theoretically producing more opportunistic times to buy and sell various asset classes.
After analyzing over 150 years of market returns, the results for both methods are nearly identical. But the impact of neglecting to rebalance is quite noticeable.
Source Fool.com
