What does it mean to "rebalance" an investment portfolio?

Rebalancing an investment portfolio involves adjusting the proportions of different asset classes to maintain a desired level of asset allocation in accordance with an investor's risk tolerance and investment goals. As market conditions change and certain investments may perform better or worse than others, the original asset allocation can be skewed. Rebalancing helps return the portfolio to its intended allocation, which might involve selling some assets that have grown to represent a larger percentage of the portfolio or buying more of those that have a smaller percentage. This practice ensures that the investment strategy remains aligned with the investor's objectives and that risk levels are managed appropriately.