Rebalancing

Investierenab 13 J.

Bringing your portfolio back to its original allocation: if stocks have risen (70% instead of 60%), you sell stocks and buy more bonds. Once a year is enough.

Rebalancing means restoring the originally planned allocation of your portfolio.

Why is it necessary? Different asset classes perform differently. When shares rise sharply, the balance shifts:

Example:

• Starting portfolio: 70% equity ETF / 30% overnight money
• After 1 year (shares +20%): 77% shares / 23% overnight money
• Rebalancing: partly sell the equity ETF, top up overnight money → back to 70/30

Advantages:

✅ Keeps the risk constant (otherwise your portfolio becomes riskier over time)
✅ Enforces "buy low, sell high" (you sell what has risen and buy what has fallen)
✅ Disciplined: no emotional decisions

How often? Once a year is enough. Or when an asset class deviates by more than 5 percentage points. For the "slipper portfolio" (Pantoffel-Portfolio) of the German consumer organisation Stiftung Warentest: once a year.

Did you know? Studies show that annual rebalancing barely changes returns but measurably reduces risk. It's one of the few strategies that offers “free” risk management.

→ ETF-Rechner

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