Portfolio rebalancing calculator

You pick a target mix for your investments, for example 60% global stocks, 20% bonds, 10% emerging markets and 10% cash. Then markets move. A good year for stocks can push them to 68% of your portfolio without you doing anything, and your risk quietly rises with them.

Rebalancing means trading back to your target mix. You trim what grew past its target and add to what fell behind. It is less about chasing returns and more about keeping the level of risk you chose on purpose. As a side effect, you sell a bit high and buy a bit low.

List each holding with its current value and its target share. The calculator shows where each one stands today, how far it drifted from target in percentage points, and the exact amount to buy or sell. Targets should add up to 100%. If they don't, you get a warning and the targets are scaled to 100% so the trades still add up.

Then choose a mode. Rebalance fully buys and sells so every holding lands exactly on target, including any new money you add. Invest new money only never sells: it sends your cash to the most underweight holdings first so they catch up together, and tells you how much new money it would take to reach every target without a sale.

There are two common rules for when to act. Calendar rebalancing checks the portfolio on a fixed date, once or twice a year, and trades back to target whatever the drift. It is simple and easy to stick to.

Threshold rebalancing only acts when a holding drifts outside a band, for example 5 percentage points either side of its target. A 60% target would trigger a trade below 55% or above 65%. You trade less in calm markets and react sooner in volatile ones. Many investors combine both: check on a calendar, act only when a band is broken.

The exact rule matters less than having one and following it. Checking every day mostly adds costs and temptation.

If you invest every month, you may never need to sell. Send each new contribution to whatever is furthest below its target and the portfolio drifts back toward your mix on its own. Selling nothing means no capital gains to declare and fewer trading fees.

This works best while your contributions are large compared with the portfolio. As the portfolio grows, one month of savings moves the needle less, and after a big market move you may need a lot of new money to close the gap. The new money only mode shows that amount, so you can decide whether to wait or to sell a little.

Every sale in a taxable account can trigger tax on the gain, and every trade can carry a fee or a spread. Before rebalancing fully, check whether you can make the trades inside a tax-advantaged account, such as a retirement account, where selling has no immediate tax cost.

Small drifts are rarely worth a trade. If the amount to move is tiny compared with the fees, leave it for next time. This calculator ignores taxes, fees and share prices, so treat the amounts as a guide and round them to whole shares if your broker requires it.