Portfolio rebalancing is the process of buying and selling assets to restore your target allocation after market movements cause your holdings to drift. Without periodic rebalancing, a strong stock market run can leave you significantly overweight in equities, increasing your risk beyond your original intention. This calculator shows exactly how much to buy or sell in each asset class.
Asset Classes
| Asset Class | Target % | Current Value ($) |
|---|
Rebalancing Actions
| Asset | Target | Current | Drift | Action |
|---|
Allocation: Before vs After
Current (Before)
After Rebalancing
For informational purposes only. Not financial advice. Consider tax implications before selling in taxable accounts. Consult a financial advisor.
How to Use the Portfolio Rebalancing Calculator
Portfolio rebalancing is how disciplined investors maintain their intended risk level over time. Markets move, and without periodic rebalancing, your carefully chosen asset allocation drifts — often in ways that expose you to more risk than you intended. This calculator takes the guesswork out of the math, telling you exactly how much to buy or sell in each asset class.
Step 1: Set Up Your Asset Classes
The calculator starts with five common asset classes (US stocks, international stocks, bonds, REITs, and cash). You can add custom asset classes using the "Add Asset" button, or remove any that don't apply to your portfolio. Your target allocations must sum to exactly 100%.
Step 2: Enter Target Allocations
Enter your desired percentage for each asset class. Your target allocation reflects your risk tolerance and investment timeline. A common starting point is 60% stocks / 40% bonds for moderate risk. More aggressive investors might choose 80/20, while those near retirement might prefer 50/50 or more conservative allocations.
Step 3: Enter Current Market Values
Enter the current market value of each asset class from your portfolio statements. If you hold the same asset class across multiple accounts (e.g., US stocks in your 401k, IRA, and taxable account), add them together for the combined total.
Step 4: Review the Rebalancing Actions
The results show the dollar amount to buy (underweight assets) and sell (overweight assets) in each category. The drift column shows how far each asset has moved from its target. When rebalancing in taxable accounts, prioritize buying underweight assets with new contributions before selling overweight positions, to minimize capital gains events.
FAQ
Is this portfolio rebalancing calculator free?
Yes, completely free with no signup required. All calculations run in your browser — your financial data is never sent to any server.
Is my financial data private?
Absolutely. Everything runs entirely in your browser using client-side JavaScript. No portfolio data is transmitted or stored anywhere.
How often should I rebalance my portfolio?
Common approaches are calendar-based (annually or semi-annually) or threshold-based (rebalance when any asset drifts more than 5% from target). Research suggests annual or threshold-based rebalancing provides most of the benefit without excessive trading costs. More frequent rebalancing can trigger short-term capital gains and transaction fees.
What is portfolio drift and why does it matter?
Portfolio drift occurs when market movements cause your actual asset allocation to deviate from your target. For example, if stocks outperform bonds, your portfolio becomes more stock-heavy than intended, increasing risk beyond your target level. Rebalancing restores your intended risk/return profile.
Should I rebalance by buying, selling, or both?
If possible, rebalance by directing new contributions to underweight assets first — this avoids selling and potential tax consequences. If new contributions aren't enough, sell overweight assets and buy underweight ones. In tax-advantaged accounts (401k, IRA), you can buy and sell freely without immediate tax consequences.
What asset classes should I include in my portfolio?
Common asset classes include US stocks, international stocks, bonds, REITs, and cash. Your ideal allocation depends on your age, risk tolerance, and investment timeline. A classic rule of thumb is to hold your age in bonds (e.g., 30% bonds at age 30), but target-date funds now often use more conservative allocations.
What does percentage drift mean in the results?
Percentage drift shows how far each asset class has moved from its target allocation, expressed in percentage points. For example, a target of 60% stocks with a current value of 68% stocks shows an 8 percentage point drift. Drift beyond 5 percentage points is generally considered significant enough to trigger rebalancing.