Your Finance: Remember to rebalance your portfolio regularly

Investors who wish they were better at buying low and selling high actually have a tool that can force them to do just that. It's called "rebalancing" -- the practice of regularly reallocating a portfolio so the investments in it stay in their originally intended proportions.

A 60 percent stocks-40 percent bonds portfolio will get out of kilter if you leave it alone long enough. To rebalance, you have to cut back on the portion that grew -- typically the stocks -- and add money to the other side.

An investor who does that regularly will protect herself from taking more risk than she intends. She also will often lock in gains and buy securities at better prices than she might otherwise.

Rebalancing is easy for workers who invest through their company 401(k) plan. A one-fund program, such as a target date retirement fund, will be regularly and automatically rebalanced by its managers.

Rebalancing works especially well for retirement investors because there are no tax consequences to their efforts.

But individual investors who have non-retirement portfolios of their own have to work harder to make rebalancing work. That's because their trades often involve some transaction costs and some tax consequences. And because they may have to rebalance manually, instead of on autopilot.

Here's how to do it best.

Don't just stick with the calendar: Set a band of 5 percent or 10 percent, and when one part of your portfolio outgrows its intended allocation by that much, start to think about rebalancing. For example, think ''rebalance'' once a 60 percent stock portfolio turns into a 66 percent stock portfolio.

Plan for tax consequences: It's better to hold taxable securities for at least a full year so they can qualify for lower long-term capital gains tax rates.

You can cut your taxes further by selling your losing investments while you're selling your winners, to lock in those losses.

Brian Burmeister, a Denver financial adviser with Charles Schwab's private client group, tells his clients to sell losers before they hit the long-term one-year mark.

That way, at tax time they can offset short-term gains and ordinary income, both of which are taxed at higher rates than long-term gains.

Think outside broad categories: Don't just think of stocks and bonds. Rebalance a global portfolio when one region runs away from the others.

Rebalance a mixed stock portfolio when growth stocks get away from dividend producers.

Do this steadily enough and you might turn into one of those rare finds: an individual investor who buys low and sells high.