The decision of when to rebalance should be part of their investment plan. They need to determine the best time to rebalance and the most cost effective means of rebalancing. The key to rebalancing is minimizing transaction costs and turnover, while at the same time maintaining adequate diversification and return.

A possible strategy for rebalancing is the NMD (new money donations) strategy: Steve and Suzie can donate appreciated assets to charity and use new money to rebalance their portfolio. If they donate their appreciated equity assets (e.g., donations-in-kind to a charity), they can use the money they would have spent on their charity donations to purchase more of their underweight assets, in this case likely bonds. See Learning Tool 8: Tithing Share Transfer Example.