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Portfolio rebalancing

Rebalancing means cleaning up your garden. You cut back what has grown too much and give more nutrients to what is lagging behind.
📅 29. April 2026 👁️ 1 views 📂 Strategier 🇳🇴 Les på norsk

Managing an investment portfolio can be compared to tending a garden. In the beginning, you might plant as many roses as tulips. But after a few years, the roses have grown huge and threaten to choke the entire flowerbed. Rebalancing simply means cutting back the roses and planting more tulips to restore the balance.

"Divine order is established in my life."
— Florence Scovel Shinn

In the financial world, order means maintaining the risk you originally decided on. If you decided to have 70 percent in stocks and 30 percent in bonds, but a massive bull market means your stocks suddenly make up 90 percent of your assets, you have taken on way too much risk. A stock market crash will now hurt you much more than you planned.

Mechanical selling of winners

Forces you to be smart: Rebalancing forces you to do what is most profitable, but psychologically hardest: You have to sell the stocks that have done great, and buy more of what has done poorly.

How to rebalance

  • Time-based: Check your portfolio once a year and adjust it back to the original allocation.
  • Threshold-based: Rebalance only if your allocation deviates by more than 5 or 10 percentage points.
  • Do it using new savings! Buy the assets that are lagging behind.

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