14. Portfolio rebalancing Portfolio rebalancing is the process of bringing the different asset classes (stocks, bonds, and cash) back into proper relationship following a significant change in the value of one or more f them. You should normally rebalance your portfolio to return your investments to the proper balance when they no longer conform to your investment plan. Suppose that you begin an investment program with a portfolio that has an asset allocation of 30% bonds, 60% equities, and 10% cash investments: Original Asset Allocation Cash 10% Equities 60% Bonds 30% One year later, some investments have performed better than others. After a year the portfolio now consists of 40% bonds, 40% equities, and 20% cash investments: One Year Later (Portfolio needs rebalancing) Cash 20% Equities 40% Bonds 40% and use the To rebalance this portfolio back to its original asset allocation, you should sell some of your proceeds to purchase additional shares of 14. Portfolio rebalancing Portfolio rebalancing is the process of bringing the different asset classes (stocks, bonds, and cash) back into proper relationship following a significant change in the value of one or more f them. You should normally rebalance your portfolio to return your investments to the proper balance when they no longer conform to your investment plan. Suppose that you begin an investment program with a portfolio that has an asset allocation of 30% bonds, 60% equities, and 10% cash investments: Original Asset Allocation Cash 10% Equities 60% Bonds 30% One year later, some investments have performed better than others. After a year the portfolio now consists of 40% bonds, 40% equities, and 20% cash investments: One Year Later (Portfolio needs rebalancing) Cash 20% Equities 40% Bonds 40% and use the To rebalance this portfolio back to its original asset allocation, you should sell some of your proceeds to purchase additional shares of