“I have seen four bear markets. Patience is the rarest commodity in the market.” — Rakesh Jhunjhunwala
Lakshmi had been investing consistently for seven years. She was proud of her discipline — monthly SIPs, no panic-selling, sensible diversification across large and mid-cap funds. By 2023, after the bull run, her portfolio had grown substantially.
What she hadn’t noticed was what had happened to her asset allocation. In 2016, when she started, she had designed a 60% equity, 30% debt, 10% gold allocation. By 2023, because equities had massively outperformed, her actual allocation was 86% equity, 10% debt, 4% gold.
She hadn’t made any active decisions to change this. Her portfolio had drifted there on its own. And without realising it, Lakshmi — a conservative investor by self-assessment — was now carrying the risk profile of an aggressive one.
When markets corrected in late 2023, Lakshmi’s portfolio fell significantly harder than she expected. Her debt allocation, which was supposed to provide cushion, was too small to absorb the blow.
What Rebalancing Actually Is
Portfolio rebalancing is the process of restoring your portfolio to its intended asset allocation — selling assets that have grown beyond their target weight and buying assets that have fallen below it. In Lakshmi’s case, this would have meant periodically selling some equity gains and moving them into debt — locking in some profits and restoring the safety cushion.
Most investors never do this, for two reasons. First, selling a winning investment feels counterintuitive. Second, most people don’t have a pre-defined allocation to return to. Without a target, there’s nothing to rebalance toward.
When to Sell: The Goal-Based Framework
Many investors also have no exit strategy. They buy without knowing what conditions would trigger a sale. This leads to either panic-selling — selling when markets fall, for the wrong reason — or never selling, when a goal deadline arrives and the portfolio is down.
The cleaner approach is goal-based: link specific investments to specific goals. When the goal is 2-3 years away, begin systematically moving that portion from equity to debt, regardless of market conditions. This “landing strategy” ensures you’re not forced to sell equity in a market trough when you actually need the money.
Jhunjhunwala’s Patience
India’s most celebrated retail investor, the late Rakesh Jhunjhunwala, was famous for holding convictions through multiple market cycles. He bought Titan when it was obscure and held it through years of volatility. But he also had a clear thesis for every position — an exit framework based on business fundamentals, not price action. He sold when businesses changed, not when markets moved.
The Lesson
Before your next investment, write down: what allocation am I targeting, when will I rebalance, and what goal does this serve? Review once a year. Rebalance if any asset class has drifted more than 5-10% from its target. Move to debt in the 2-3 years before any major goal. If this sounds like a lot to manage alone, that’s because it is — and it’s precisely what a financial planner does.
Lakshmi has since rebalanced, with her planner’s help. Her portfolio now reflects what she actually wants. She feels less excited when markets rise and less terrified when they fall. That, she says, is the real win.
The Planner Advantage
Rebalancing and goal-linked exit planning are two of the most important — and most neglected — services a financial planner provides. Most investors will never rebalance on their own, because it requires selling something that’s going up, and that feels wrong without an outside perspective. A planner builds the rebalancing trigger into your annual review: if equities have grown beyond your target allocation by more than 5-10%, it’s time to trim and redirect. They also build your landing strategy — the systematic move from equity to debt in the 2-3 years before any major goal. This kind of structured, disciplined portfolio management is what separates investors who arrive at their goals from those who are perpetually “almost there.”