Portfolio Rebalancing Calculator
Find out exactly how much to buy or sell in each asset class to restore your target investment allocation. Use this after market movements have shifted your stocks, bonds, and cash away from your desired percentages.
About this calculator
Portfolio rebalancing is the process of realigning the weightings of assets in a portfolio to maintain a desired risk profile. Over time, asset classes grow at different rates, causing allocations to drift. The target value for each asset class is: Target Value = Total Portfolio Value × (Target Allocation % / 100). The trade required for each asset is: Trade Amount = Current Value − Target Value. A positive number means you should sell that amount; a negative number means you should buy. This calculator sums the absolute differences across all three asset classes (stocks, bonds, cash) to show the total dollar amount that needs to be reallocated. Regular rebalancing — typically annually or when allocations drift more than 5% — helps maintain your intended risk exposure and enforces a 'buy low, sell high' discipline automatically.
How to use
Suppose your $100,000 portfolio currently holds $70,000 in stocks, $20,000 in bonds, and $10,000 in cash. Your targets are 60% stocks, 30% bonds, and 10% cash. Target values: stocks = $60,000, bonds = $30,000, cash = $10,000. Differences: stocks = |$60,000 − $70,000| = $10,000 (sell), bonds = |$30,000 − $20,000| = $10,000 (buy), cash = |$10,000 − $10,000| = $0. Total rebalancing amount = $10,000 + $10,000 + $0 = $20,000. You would sell $10,000 of stocks and use the proceeds to buy $10,000 of bonds.
Frequently asked questions
How often should I rebalance my investment portfolio?
Most financial advisors recommend rebalancing once a year or whenever any asset class drifts more than 5 percentage points from its target allocation — whichever comes first. Annual rebalancing is simple and avoids excessive transaction costs or tax events. Threshold-based rebalancing (acting only when drift exceeds a set limit) can be more tax-efficient because it avoids unnecessary trades in years when markets haven't moved significantly. Studies suggest that either approach performs similarly over time; the most important factor is choosing a method and sticking to it consistently.
What are the tax implications of rebalancing a taxable portfolio?
Rebalancing a taxable brokerage account by selling appreciated assets triggers capital gains tax, which can erode returns. To minimize taxes, investors can rebalance within tax-advantaged accounts (like IRAs or 401(k)s) first, where trades have no immediate tax consequences. Another strategy is to redirect new contributions toward underweight asset classes rather than selling overweight ones — this achieves rebalancing without generating taxable events. In taxable accounts, favor selling assets held more than one year to benefit from lower long-term capital gains rates, and consider harvesting losses to offset any gains.
Why is maintaining a target asset allocation important for long-term investing?
Your target allocation reflects your risk tolerance, time horizon, and financial goals. When markets run up, stocks can grow from a planned 60% to 75% of your portfolio — meaning you now carry far more equity risk than you intended, which can lead to painful losses in a downturn. Conversely, an underweight in stocks during a bull market can leave returns on the table. Regular rebalancing keeps your portfolio aligned with your personal risk profile and investment plan. It also instills discipline: you are systematically selling high-performing assets and buying laggards, which is the essence of 'buy low, sell high.'