What is one reason to rebalance a retirement portfolio periodically?

Rebalancing a retirement portfolio periodically is primarily done to maintain the desired level of risk. Over time, as the values of different investments change, the original asset allocation can drift. For instance, if stocks perform exceptionally well, they may take up a larger percentage of the portfolio than intended, potentially increasing the overall risk profile beyond what the investor is comfortable with. By rebalancing, an investor can realign their portfolio with the original strategy, ensuring that it reflects their risk tolerance and investment goals. This practice helps in managing risk more effectively and can also contribute to long-term investment performance by enforcing a disciplined approach to buying low and selling high.