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Investing Specialists

Rebalance, but Not to Excess

Transaction costs, time horizon, and personality all play a role.

Note: This article is part of Morningstar's November 2013 Investor Starter Kit special report. An earlier version of this article appeared Aug. 23, 2010.

Reams of academic data show that periodically rebalancing a portfolio back to its target allocations is one of the simplest ways to lower the risk of your investments without doing significant harm to your portfolio's return potential.

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