If you are new to investing – or even if you’ve been at it for a while – the idea of rebalancing your portfolio probably isn’t a high priority.There is a way to do it correctly, however, and getting the job done right the first time can avoid problems – and worse yet, unnecessary losses or expenses – down the road.Related: UNDERSTANDING AND USING PRICE-EARNINGS RATIOSThe Rebalancing ProcessRebalancing involves buying or selling portions of your portfolio to set the weight of each asset class back to its original state – or to a new state based on changing market conditions or a change in your tolerance for risk.Normal rebalancing takes place because of the need to change the preordained balance you set up to achieve your financial goals. You can never predict with 100% accuracy how well (or how poorly) a given asset class or investment will do. For this reason, it’s important to “take stock” from time to time and adjust as needed.Investors Who Need To RebalanceIf you own stocks, bonds, mutual funds or ETFs your holdings should be rebalanced when they no longer meet your investing goals.You may not need to rebalance if all your investments are held in a target date fund or any other fund that automatically rebalances. If your investments are all held within automatically-managed accounts like Betterment, Wealthfront and others, you don’t need to rebalance.If all your investments are handled by a financial adviser, he or she will take care of any need to rebalance on an ongoing basis.Most People Should Rebalance Once A YearFor the most part, rebalancing once a year is sufficient. If your investments are in retirement accounts, you can rebalance any time during the year. Many people do it during tax season, especially if they make IRA contributions ahead of the deadline.If you have taxable (nonretirement) accounts it’s considered wise to rebalance before the end of the calendar year to take advantage of tax-loss harvesting. This involves reducing your tax bill by selling losing investments before the end of the year.The ProcessHopefully you have a record of each asset class in your portfolio including the total cost of each security (by asset class) as well as the total cost of your portfolio. This information will provide historical data so you can compare it with current values.When ready to rebalance, review the current value of each asset class in your portfolio. Calculate the weight of each asset class by dividing the current value of that asset class by the total value of your entire portfolio.Compare these weights to your original weights. If there are no significant changes or if there is no other reason to change the balance, stand pat.If, on the other hand, there have been significant changes to the weights of your asset classes, especially if these changes have caused big changes in the risk to which you have exposed yourself, you may want to sell securities from asset classes whose weight is too high and buy securities in asset classes that have declined.Related: THE DUMBING DOWN OF SMARTPHONESHold The (Tax) PhoneBefore pulling the trigger consider the tax implications of any readjustments you plan to make. Don’t expose yourself to excessive capital gains taxes if you can – instead – avoid adding funds to overweight asset classes and give them time to rebalance on their own.You can add funds to underweight asset classes while waiting for overweight classes to self-balance and save yourself the headache and expense of paying taxes needlessly.