Portfolio Rebalancing Calculator
Determine buy and sell amounts needed to realign your portfolio to target asset allocation percentages.
What This Calculator Does
This calculator determines the buy and sell actions needed to realign your investment portfolio to target allocation percentages. Enter your current holdings and desired allocation, and it calculates the exact dollar amounts to move in each asset class.
The Formula
Over time, asset classes grow at different rates, causing your portfolio to drift from its target allocation. Rebalancing sells overweight assets and buys underweight ones to restore the original risk profile. This calculator computes the exact trade amounts needed.
Step-by-Step Example
Enter your assets
Add each asset class with its name and current market value. Example: US Stocks $60,000, Bonds $30,000, International $10,000.
Set target percentages
Enter the desired allocation for each asset. Ensure they sum to 100%. Example: 60% stocks, 30% bonds, 10% international.
Calculate rebalancing trades
The calculator shows buy/sell amounts for each asset class to reach your target allocation.
Execute trades
Make the indicated trades in your brokerage account. Consider tax implications of selling in taxable accounts.
Real-World Use Cases
Annual Portfolio Review
Rebalance annually or when any asset class drifts more than 5% from its target to maintain your risk profile.
New Contribution Direction
Direct new contributions to underweight asset classes instead of selling to rebalance, avoiding taxable events.
Risk Management
After a strong equity rally, rebalancing locks in gains by selling stocks high and buying bonds low.
Common Mistakes to Avoid
Not ensuring target allocations sum to exactly 100%. Any deviation means the calculator cannot properly allocate funds.
Rebalancing too frequently in taxable accounts, generating unnecessary capital gains taxes. Annual or threshold-based rebalancing is typically sufficient.
Ignoring transaction costs and tax implications when making rebalancing trades.
Setting target allocations that do not match your actual risk tolerance and time horizon.
Frequently Asked Questions
Accuracy and Disclaimer
This calculator provides mathematical rebalancing guidance only. It does not account for tax consequences, transaction costs, or minimum trade sizes. Consult a financial advisor before making portfolio changes.
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