Portfolio rebalancing in plain words: what it is and why people do it

Two screenshots. The first is from three years ago, from the evening you sat down and decided: some in shares, some in something steadier. There was a logic to it, and it felt settled. The second is from today. Same accounts, same track names, and a mix that no longer looks like the one you chose. The part that rose has taken up room, and nobody decided that.

The feeling that comes with it is vague: "Something has moved, and we're not professional enough to manage a portfolio." From there, two familiar paths. Never touch it, "why break something that works". Or change the mix whenever something in the news is frightening or exciting, and discover a year later that the portfolio is a collection of reactions.

There is a part of you that wants the risk to stay where you put it, because you chose it for the family. And there is a part that doesn't want to sell what is going up. "Why sell the winner?" It feels like giving up a gain, and leaving things alone keeps a sense of success intact. That makes sense: it is hard to part with what is working.

Portfolio drift: why it happened without you deciding

It didn't happen because of you. Drift is quiet, and there is no alert for it. Each part of a portfolio grows at its own pace, so after a few years the part that grew faster takes a bigger share than you planned. Nobody asked.

"Not touching it" is also a decision, just one you didn't know you were making. A mix that moves by itself is a decision about the household's risk, made for you by the numbers.

Rebalancing is returning to the mix you chose. It isn't a market forecast, it isn't a guess at what will rise, and this article makes no claim that it improves returns. It protects a decision you already made.

There is one more thing that is easy to miss: a household's mix doesn't live in one account. It is spread across the pension fund, the keren hishtalmut (קרן השתלמות, a tax-advantaged savings fund), the kupat gemel (קופת גמל, a provident fund) and the brokerage account, sometimes for two partners. Rebalancing inside one account sees only part of the picture. The household portfolio map shows how to gather all the parts on one page.

Because part of the picture sits in a kupat gemel or keren hishtalmut, one sentence before going on: choosing a track, transferring, or withdrawing from one of them is a decision about each family's own case. By law, pension advice requires a pension adviser's licence. This article describes how the instruments work, and a licensed pension adviser can look at your case.

Your investment mix: two lines on one sheet

The goal: a "mix we chose" line above a "mix today" line, both worked out across every account in the household. Without guessing where the market is going, and without selling or moving anything this week to close the gap. What people describe after seeing the gap is one yearly rule; what it says is your decision.

Rebalancing once a year: from the sheet to the rule

Stage 1: write down the mix you chose

In your own words, not in jargon. "Roughly half in shares, half in steady things." "About a third in shares, the rest in steady things." If you never wrote one down, that is fine; the next stage will show you what is there, and then you can ask whether it is what you would choose. This article proposes no mix; there is no single right answer.

Stage 2: work out today's mix across every account

For each account, the balance times the share in equities of its track. Add up the results and divide by the total of all balances. The equity share of each pension, gemel or hishtalmut track comes from the asset breakdown published on Gemel-Net and Pension-Net, the Capital Market Authority's public comparison sites. For a brokerage account, it comes from what you hold in it.

272,000 divided by 430,000 is about 63%. That is the "mix today" line for the household in the example. If the sheet says "roughly half", the gap is visible, and you can ask a calm question about it.

In AlphaHome: the pension page gathers the balances of the long-term accounts you typed in from their statements, for the whole household, and each account has a free-text field for its track name. Net worth adds property equity, savings and trading capital to them. The page doesn't know the equity share of each track; that comes from Gemel-Net and Pension-Net.

Stage 3: pick a rule before you need it

There are two kinds of rule people use:

Two kinds of rebalancing rule

Aspect	By the calendar	By drift
When you look	On a fixed date, once a year for example	When the mix moves past a drift you set in advance
What you have to remember	One date in the calendar	To check now and then whether you have crossed the line
What's good about it	Simple, predictable, independent of the news	Acts only when there really is a gap
What it costs	Sometimes you check and there is nothing to do	Needs watching, and the threshold is itself a decision
Example only	"Every January"	"A 10 percentage point drift", an example, not a recommended threshold

By the calendarBy drift

By the calendar

When you look

On a fixed date, once a year for example

What you have to remember

One date in the calendar

What's good about it

Simple, predictable, independent of the news

What it costs

Sometimes you check and there is nothing to do

Example only

"Every January"

There is no right threshold and no right date. What matters is that the rule is written on an ordinary day, so it isn't set on a loud one.

Stage 4: three ways to rebalance, and what each costs

When the rule shows a gap, these are the three ways people describe, each with a different cost:

• Through new deposits. The coming months' deposits go to the part that shrank, with nothing sold. Slow, and no sale involved.
• A track switch inside a fund. In a kupat gemel or keren hishtalmut, changing investment track is treated differently for tax from a sale in a brokerage account. The exact rules for your case are checked with the fund and with the Tax Authority.
• A sale in a brokerage account. Selling part of what rose can trigger capital-gains tax: per the Tax Authority, 25% on the real gain. On top of that, buying and selling commissions. The mechanism is explained in the capital-gains tax guide.

Tax and pension figures are as of September 2026; ceilings update yearly.

And in your head, each way costs something different: new deposits barely feel like a decision, while selling the winner feels like surrender. Whether, how and when to rebalance is your decision.

When the market is loud and the rule is quiet

"We rebalanced, and then what we trimmed kept rising." It is hard to watch, and it does happen. Today: reread the rule you wrote and notice it never promised otherwise. Rebalancing holds a level of risk; it doesn't guess. Next time: write that price into the rule, in advance and in words: "Sometimes what we trim keeps rising, and we choose this anyway."

"We have no written mix at all." "don't touch it" saved you a decision, which makes sense when time is short. Today: write down today's mix as it is, and ask whether it is what you would choose. What people in this situation describe is settling on a mix only after seeing the current one; the decision is yours. Next time: a yearly date in the calendar.

A frightening headline, and your hand wants to change everything now. This is exactly the moment the rule was written for. Today: check what the rule says about today. If it says nothing, it has already answered. Next time: add a line to the rule: "We don't change the mix in a week of news."

Keeping what you chose, on purpose

A portfolio nobody looks at chooses the family's risk by itself. A portfolio with two lines and one rule gets checked once a year, calmly, and holds the decision you made when you were calm. You need a sheet, a calculator and a date, not a professional title. We know what we chose, and we keep it on purpose.

This week: the "mix today" line

• For each long-term account, the balance from the pension page; for a brokerage account, the balance on its latest statement
• For each account, the track's equity share from Gemel-Net or Pension-Net
• Multiply, add up, divide by the total balance
• Above the result, write "the mix we chose"
• One date in the calendar for next year's check

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