Portfolio Rebalancing Calculator
The trades that return a portfolio to its target weights, with a band so small drifts are left alone and an option to rebalance with new money instead of selling. Selling to rebalance realises gains, which is a cost the drift often does not justify.
Also called: rebalance portfolio, portfolio drift calculator.
$150,000.00 of trading brings the portfolio back to its targets. 2 of 3 holdings have left the 5% band. The rest are close enough that trading them would cost more than the drift. Selling the overweight holdings realises gains on them. Check the tax before trading, and consider directing new contributions instead.
An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.
Current against target
Hover or drag for valuesWhat to trade
| Holding | Current | Current % | Target % | Drift | Trade | Action |
|---|---|---|---|---|---|---|
| Equity | $600,000 | 60% | 50% | 10% | $100,000 | Sell |
| Debt | $250,000 | 25% | 30% | -5% | $0 | Inside band |
| Gold | $150,000 | 15% | 20% | -5% | $50,000 | Buy |
This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.
How this is calculated
Rebalancing is arithmetic on shares of a whole: each target weight applied to the total gives the value that holding should carry, and the difference is the trade. The band is what stops this becoming a treadmill, since a holding two points off target costs more in spreads and tax to correct than the drift is worth. Directing new money at the underweight holdings does the same job without a sale, which matters where a sale is a taxable event, and the page shows when new money alone is not enough to close the gap rather than pretending it is.
each holding is traded to the difference between its target share of the whole portfolio and what it currently holds- w_k
- Target weight
- V
- Portfolio value including new money
- v_k
- Current value of the holding
Method and limits
What it assumes
- Target weights are given as percentages and are scaled to sum to a hundred if they do not.
What it deliberately does not model
- Trading costs, bid-ask spreads and capital gains tax are not deducted from the trades shown.
- Fractional units may not be tradeable, so real trades will round.
- Rebalancing back to target is a discipline, not a return-maximising strategy.
Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator
Frequently asked questions
- How often should I rebalance?
- Most evidence points to once a year, or whenever a holding leaves its band, whichever comes first. Rebalancing more often adds cost and tax without improving the outcome measurably.
- Why rebalance with new money?
- Because a sale realises capital gains and a purchase does not. If you are still contributing, directing contributions at the underweight holdings closes the gap without a taxable event.