When it comes to investing, many people adhere to a target ratio of 80 percent equity and 20% debt.
Certain assets grow faster than others over time. As a consequence, the ratio becomes different.
As a result, in such a situation, investors are more likely to withdraw funds from one asset and invest them in another in order to reach the target ratio.
Rebalancing is the method of taking money from one investment and reinvesting it in another.