Motley Fool Money How to Review and Rebalance Your Portfolio
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Dec 20, 2025 
Sean Gates, a Certified Financial Planner, shares invaluable insights on how to effectively review and rebalance your investment portfolio as 2026 approaches. He discusses the importance of aligning your target allocation with your risk tolerance and explains the difference between time-based and metric-based rebalancing strategies. Gates also addresses common myths about retirement and life expectancy, highlights practical rebalancing tactics, and warns against the pitfalls of investor behavior that can lead to poor decisions.
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Set A Target Allocation First
- Define a clear target allocation before rebalancing so you know what to rebalance toward.
- Base that target on your risk tolerance, risk capacity, and an investment policy or financial plan.
Two Ways To Rebalance
- Rebalancing can be time-based or metric-based, like percentage drift or valuations.
- Incorporate market events and valuations into when and how you rebalance.
Quilt Chart Shows Value Of Diversification
- A well-diversified portfolio usually sits mid-pack across yearly top performers shown in a quilt chart.
- Diversification smooths returns and reduces the temptation to chase last year's winners.