A lot of resources say you should rebalance your allocation e.g 70/30 stocks/ bonds quarterly or annually etc. However how necessary is this? Is holding a few years worth of cash/ bonds a viable alternative? As rebalancing a portfolio incurs brokerage fees and taxes on any capital gains
If possible, make the various trades/exchanges in your tax-deferred account(s) so that you do not incur trading fees.
Or if your AA is just slightly off from where you want it, you can get back to your target AA by making new contributions to the asset class that is a bit lower than your target. This can be a slower process, and is sometimes referred to as 'organic', but it should get you back to where you want to be. For example, if you want to be at 70% stocks / 30 % bonds, and you're making monthly 401k contributions to stocks and bonds, but your current AA has drifted to 78% stocks / 22% bonds: change your 401k contributions be all bonds. Over the next few pay cycles, you'll catch up with more bonds and your overall AA will move back to 70/30. Of course, this all depends on how large your total portfolio is, how much you're contributing per pay period, and how frequently you're paid. But that should give you the general idea of how to organically rebalance.