How Often to Rebalance Your Portfolio, and How to Do It Without Second-Guessing

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Last updated: 16 October 2026 · By Spencer Li, CFTe

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Rebalance on a fixed schedule, or when your mix drifts past a set limit, and never because of the news. For most DIY investors, checking once every 3 to 12 months and only trading when a weight is more than about 5 percentage points off target is enough.

The idea behind it is simple. Check often, trade rarely. Your target split is your risk level, and rebalancing is just putting the risk back where you chose it. Everything below is about doing that with as little effort and as few decisions as possible.

Why rebalance at all?

Because markets change your risk for you, without asking. Say you start at 60% stocks and 40% bonds. After a strong year for stocks, you might be 66% in stocks. You now own a riskier portfolio than the one you chose, and you never decided to.

MoneySense, the national financial education site, describes the job in one line: “sell assets that have grown above their target weight and buy those that have fallen below, to restore your intended risk level.” The point is the risk level. Rebalancing is not a way to boost returns, and some years it will cost you a little, because you trim whatever has been winning.

How does the maths actually work?

Here are 2 hypothetical cases, both starting from SGD 100,000 split 60/40.

The boom case feels easy. You are trimming a winner. The crash case is the hard one, because rebalancing asks you to buy stocks at exactly the moment the news is worst. That second trade is where a written rule earns its keep.

[INFOGRAPHIC: two pie charts drifting from 60/40, one to 66/34 after a boom and one to 51/49 after a crash, with arrows showing the sell and the buy]

Should you rebalance by calendar or by bands?

Either works. The difference is what triggers the trade.

Calendar rebalancing means you pick a date and rebalance on it, whatever the weights are. MoneySense suggests doing it “on a schedule (annually is typical) rather than in response to market events, to avoid making emotional decisions.” It is simple, and it removes the temptation to time things.

Band rebalancing means you check on a schedule, but you only trade if a weight has drifted past a set limit. A common choice is about 5 percentage points either side of target. So a 60% stock target would trigger a trade below 55% or above 65%. In the boom case above, 65.7% would trigger a trim. A year where stocks only drifted to 63% would not.

Personally, I prefer bands. They trade less in quiet years and respond faster in wild ones. But a calendar rule you follow beats a band rule you keep second-guessing.

So how often should you check?

This is where people get confused, because different sources give different numbers. MoneySense says annually is typical and to review “at least once a year”. In the DIY guide to building your investment portfolio, the suggestion is about once every 3 months. When I set the rules for my own long-term portfolio, I chose a once-a-month mechanical check.

They fit together once you separate checking from trading. A monthly or quarterly check with a band is cheap, takes 10 minutes, and usually ends with “no action”. An annual check without a band is simpler and suits people who would rather not look. What you should avoid is checking often and trading every time, because each trade has costs and each look is a chance to override your own rule.

What is the cheapest way to rebalance?

Use new money. If you add to your portfolio every month, put each new deposit into whichever side is below target. That moves the mix back towards your split without selling anything.

This works especially well if you dollar-cost average. You save the selling fees and the spread on the trim, and you never have to sell a winner. It only fails when the drift is bigger than your monthly deposits can fix, which is usually after a big move in the market, and that is when a proper rebalance with a sale is worth doing.

Dividends can do the same job. Instead of reinvesting them into the asset that paid them, send them to whichever side is light.

What mistakes should you avoid?

There are 3 that come up again and again.

The first is skipping the crash rebalance. It is the one that feels wrong, and it is the one that matters most for your long-run mix. Writing the rule down before the crash is the only defence I know.

The second is rebalancing too often. Trading every small drift adds fees and spreads, and if your account charges a minimum fee per trade, small trades can cost a large share of what you move.

The third is changing the target during a rebalance. If you decide mid-crash that 60/40 should now be 40/60, that is a new plan made under stress. Change your target on a calm day, with a reason you can write in a sentence. How to split stocks and bonds is the place to set that target in the first place.

For what to hold on each side, see how to choose an index ETF, and for surviving the crash itself, how to build a portfolio for a market crash.

If you trade as well as invest, the free 15-Minute Swing Trader’s Checklist is at the end of this post.

What is your band, and have you written down what you will do the day stocks fall through it?

FAQ

How often should I rebalance my portfolio?

MoneySense says annually is typical. Many DIY investors check every 3 to 12 months and only trade when a weight is more than about 5 percentage points off target.

Is it better to rebalance by date or by threshold?

Both work. A date is simpler. A threshold, or band, trades less in quiet years and responds faster after big moves.

Should I sell stocks to rebalance?

Only if new money cannot do the job. Directing new deposits and dividends to the underweight side is cheaper and avoids selling.

Does rebalancing increase returns?

Not reliably. Its job is to keep your risk at the level you chose. In some years it trims a winner and costs you a little.

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About the author. Spencer Li is the founder of Synapse Trading and a Certified Financial Technician (CFTe). His trade log is public: every trade since April 2024, dated, losses left in.

Educational content only, not personalised financial advice. Trading carries risk, including loss of capital. Past performance is not indicative of future results. Synapse Trading is not licensed or regulated by MAS.

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Educational content only, not personalised financial advice. Trading carries risk, including loss of capital. Past performance is not indicative of future results. Synapse Trading is not licensed or regulated by MAS.