Investing
Portfolio Rebalancing Calculator
Markets pull a portfolio away from its plan: the winners grow until they dominate, quietly raising your risk. Rebalancing sells some of what ran up and buys what lagged. Directing new contributions to the laggards does it without triggering taxable sales.
Largest drift from target
10%
Rebalancing requires selling as well as buying.
Rebalancing needs some selling here. In a taxable account that realises capital gains — prefer to rebalance inside tax-advantaged accounts, and direct new contributions and dividends to the underweight holdings first. Selling should be the last resort, not the first move.
- Portfolio value after contribution
- $110,000
- Total to buy
- $14,000
- Total to sell
- $4,000
Trades to reach your target
| Holding | Current | Now | Target | Buy / sell |
|---|---|---|---|---|
| US stocks | $70,000 | 70% | 60% | -$4,000 |
| Bonds | $30,000 | 30% | 40% | $14,000 |
How this calculator works
The target value for each holding is the total portfolio, including your new contribution, times its target weight. The trade is that target minus the current value — positive to buy, negative to sell. Target percentages are normalised if they do not sum to 100%. Drift is each holding's current share of the existing portfolio versus its target.
Transaction costs, bid-ask spreads, and the capital-gains tax on any selling are not modelled — in a taxable account those can be significant, which is why the tool flags when selling is required. It assumes you rebalance to the exact target; a tolerance-band approach trades less often for a small drift.
Try an example
Frequently asked questions
What is portfolio rebalancing?
Adjusting your holdings back to their target allocation after market moves have shifted them. If stocks surge, they grow beyond their target weight and your portfolio becomes riskier than intended. Rebalancing trims them back and tops up what lagged, restoring the risk level you chose.
How often should I rebalance?
Once a year, or whenever an allocation drifts more than about five percentage points from target, works well. Rebalancing more often adds cost and taxes for little benefit; less often lets risk drift too far. A simple calendar check plus a drift threshold covers most needs.
How do I rebalance without triggering taxes?
Direct new contributions and reinvested dividends to the underweight holdings, and do any selling inside tax-advantaged accounts like a 401(k) or IRA, where trades are not taxable. In taxable accounts, selling to rebalance realises capital gains, so contributions are the tax-free lever.
Why does drift matter?
Because it changes your risk without your deciding to. A 60/40 portfolio that drifts to 75/25 after a bull market will fall much harder in the next downturn than you planned for. Rebalancing is really risk management — it enforces buying low and selling high as a side effect.
Should I rebalance during a crash?
That is exactly when rebalancing does its most valuable work — and when it is hardest emotionally. It means selling bonds to buy stocks that just fell, which feels wrong but is the discipline paying off. Automating it, or following a fixed rule, removes the temptation to freeze.
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Disclaimer: DayCents provides this calculator for educational purposes only. Results are estimates based on your inputs and the stated assumptions — they are not financial advice, a quote, or an offer of credit. Consult a qualified financial professional before making major money decisions.