Rebalancing is simply bringing your portfolio back to its original allocation. Over time, some of your investments may become out of alignment with your investment goals. Let's say your original allocation mix was a 50/50 split between stocks and bonds. Over the course of 2 years, stocks outperformed bonds, leaving you with a portfolio that's 70% stock and 30% bonds. By transferring assets from your stocks over to your bonds, you can set your allocation back to its original mix.