**Portfolio Rebalancing** refers to the process of returning the values of a portfolio's *asset allocations* to the levels defined by an *investment plan*. Those levels are intended to match an investor's *tolerance for risk* and *investment goals*.

Over time, asset allocations can change as market performance alters the values of the assets, both individually and relative to each other. Rebalancing involves periodically buying or selling the assets in a portfolio to regain and maintain that originally desired level of *asset allocation*.  

For example, take a portfolio with an original *target asset allocation* of 50% stocks and 50% bonds. If the stocks' prices rose during a certain period of time, their higher value could increase their *allocation proportion* within the portfolio to, say, 70%. The investor may then decide to sell some stocks and buy bonds to realign the percentages back to the original target allocation of 50%-50%.  

Rebalancing is this process of reviewing, deciding, and reallocating the proportions of assets or asset categories to restore the portfolio back in line with the investment plan after a period of natural drift over time.

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