Investment Strategies: Rebalancing

Rebalancing is the process of buying and selling portions of your portfolio in order to set the weight of each asset class back to its original state. In addition, if an investor's investment strategy or tolerance for risk has changed, he or she can use rebalancing to readjust the weightings of each security or asset class in the portfolio to fulfill a newly devised asset allocation. It is the process of restoring your portfolio to your target allocation for it.

The rebalancing of investments (or Constant Mix) is the action / trading strategy of bringing a portfolio that has deviated away from one's target asset allocation back into line. This can be implemented by transferring assets, that is, selling investments of an asset class that is overweight and using the money to buy investments in a class that is underweight, but it also applies to adding or removing money from a portfolio, that is, putting new money into an underweight class, or making withdrawals from an overweight class.

 Here are three great article I found- One on FINRA.org about rebalancing your portfolio , another on Investopedia about consequences of imbalance and one on Marketwatch about right way to rebalance your portfolio.