Portfolio Rebalancing Tool
Optimize your asset allocation and rebalance your investment portfolio
Portfolio rebalancing is the process of realigning asset allocations to your target percentages. As investments grow at different rates, your portfolio drifts from its intended allocation, potentially increasing risk or reducing returns.
Formula:
Rebalance Amount = Current Value - (Total Portfolio × Target %)Calculate the difference between current and target allocation for each asset class, then buy/sell accordingly.
- 1
Enter your target allocation for each asset class
- 2
Input current values for each holding
- 3
The calculator shows how far each asset has drifted
- 4
View specific buy/sell recommendations
- 5
Set rebalancing threshold (e.g., 5% drift)
- 6
Execute trades to return to target allocation
- Maintains intended risk level over time
- Forces systematic 'buy low, sell high' behavior
- Prevents emotional decision-making
- Improves risk-adjusted returns over time
- Required for tax-loss harvesting opportunities
- Annual portfolio review
- After significant market movements
- When adding new contributions
- Before major life changes
- During tax-loss harvesting season
- When changing risk tolerance
- •Use new contributions to rebalance and avoid selling
- •Rebalance in IRAs and 401(k)s to avoid taxes
- •Consider tax-loss harvesting during rebalancing
- •Set calendar reminders for regular review
Have questions about using this calculator? Check out our financial guides or contact us for help.
Current Allocation
Target Allocation
US Stocks
52.9% → 50%
Sell $2,500
2.94% of portfolio
International Stocks
23.5% → 25%
Buy $1,250
1.47% of portfolio
Bonds
17.6% → 20%
Buy $2,000
2.35% of portfolio
Cash
5.9% → 5%
Sell $750
0.88% of portfolio
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Understanding the Concept
Portfolio rebalancing involves adjusting your investment holdings to maintain your desired asset allocation. Regular rebalancing helps manage risk and can improve long-term returns.
Tips to Optimize
- Rebalance at least annually or when allocations drift by 5%+
- Use new contributions to rebalance instead of selling
- Consider tax implications when selling in taxable accounts
- Rebalance more frequently in volatile markets