Portfolio Rebalancing Calculator
Calculate what to buy and sell to rebalance your portfolio. Minimize taxes, analyze drift, and maintain your target allocation with intelligent rebalancing strategies.
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Current Portfolio Holdings
50.0%
20.0%
28.0%
2.0%
Total Portfolio Value
$100,000
Current Allocation Total
100.0%
Target Allocation Total
100.0%
Holdings Count
4
Rebalancing Settings
Drift threshold (%)
Prioritize tax-advantaged accounts
⚠️ Rebalancing Recommended
Your portfolio has drifted 8.0% from target allocation. Rebalancing is recommended to maintain your investment strategy and risk profile.
Total Trade Value
$20,000
20.0% of portfolio
Estimated Tax Cost
$270
Capital gains taxes
Number of Trades
4
Required transactions
Current Allocation
Target Allocation
Allocation Drift from Target
Red bars exceed 5% threshold and trigger rebalancing
Required Trades
| Asset | Action | Amount | % Change | Tax Impact |
|---|---|---|---|---|
| Bond Fund | BUY | $7,000 | +25.0% | - |
| US Stock Index | SELL | $8,000 | -16.0% | $240 |
| International Stocks | SELL | $2,000 | -10.0% | $30 |
| Cash Reserve | BUY | $3,000 | +150.0% | - |
Tax-Efficient Rebalancing Steps
- 💡Estimated tax cost: $270 in capital gains taxes
- Step 1Use new contributions to rebalance (avoid selling)
- Step 2Rebalance tax-advantaged accounts first (IRA, 401k, Roth)
- Step 3In taxable accounts, prioritize selling assets with losses (tax-loss harvest)
- Step 4Only sell appreciated assets in taxable accounts if necessary
Rebalancing Frequency Comparison
quarterly
Best drift control but highest tax cost. Best for tax-advantaged accounts.
semi-annual
Good balance of control and tax efficiency. Recommended for most investors.
annual
Tax-efficient but allows more drift. Good for taxable accounts.
threshold
Most tax-efficient. Only rebalances when needed. Recommended for taxable accounts.
Optimal Rebalancing Threshold
Recommended Threshold
5%
Based on your portfolio volatility (12%), tax rate (15%), and 15-year time horizon, a 5% threshold balances drift control with tax efficiency.
Why Rebalance Your Portfolio?
Maintain Your Risk Level
Over time, winning assets grow while losing assets shrink. A 60/40 stock/bond portfolio might drift to 70/30 after a bull market. This increases your risk beyond your comfort level.
Rebalancing forces you to "sell high, buy low" - selling appreciated assets and buying underperforming ones to maintain your target allocation.
Tax-Efficient Strategies
- Use new contributions: Direct fresh money to underweight assets
- Rebalance in IRAs first: No tax consequences in retirement accounts
- Tax-loss harvest: Sell losers to offset gains
- Rebalancing bands: Only trade when drift exceeds threshold
When to Rebalance?
Calendar-Based
Rebalance annually or semi-annually. Simple and effective for most investors.
Threshold-Based
Rebalance when any asset drifts 5%+ from target. More tax-efficient.
Hybrid Approach
Check annually, but only rebalance if drift exceeds threshold. Best of both.
How to Use This Calculator
Step 1: Enter Your Holdings
Add each holding in your portfolio with its current value, asset class, and cost basis. Include tax status (taxable, IRA, or Roth) for accurate tax calculations.
Step 2: Set Target Allocation
Define your desired allocation percentage for each holding. These should add up to 100%. Use famous portfolios (60/40, All Weather) or the Asset Allocation Calculator for guidance.
Step 3: Configure Rebalancing Settings
Enable rebalancing bands to avoid unnecessary trading. Set your capital gains tax rate and enable tax-efficient mode to prioritize tax-advantaged accounts.
Step 4: Review Required Trades
The calculator shows exactly what to buy and sell, including estimated tax costs. Follow the tax-efficient steps to minimize your tax bill while rebalancing.
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Key Financial Terms
Understand the essential concepts behind this calculator
Portfolio Rebalancing
The process of buying and selling assets to realign your portfolio with its target allocation.
Asset Allocation
The mix of different investment types in your portfolio, determining both risk and potential returns
Diversification
Spreading investments across different asset classes to reduce risk—the 'don't put all your eggs in one basket' principle.
Tax-Efficient Rebalancing
Rebalancing strategies that minimize capital gains taxes by using smart trade sequencing.
Frequently Asked Questions
Common questions about the Portfolio Rebalancing Calculator
📊 Historical Market Data Sources
• Average annual return (1926-2024): ~10% nominal, ~7% inflation-adjusted
• Standard deviation: ~20% (indicating significant year-to-year volatility)
→ Source: NYU Stern - Historical Returns on Stocks, Bonds and Bills
• S&P 500 average dividend yield: 1.5-2.0% (as of 2024-2025)
• Historical dividend growth rate: ~5.9% annually (1960-2024)
→ Source: S&P Dow Jones Indices
• 10-Year Treasury bonds: ~5% average annual return (1926-2024)
• Corporate bonds (investment grade): ~6% average annual return
→ Source: NYU Stern - Corporate Finance Data
• Long-term average: ~3% annually (1926-2024)
• Recent (2020-2024): 2-8% range with 2022 peak at 8%
→ Source: Bureau of Labor Statistics - Consumer Price Index
Important: Past performance does not guarantee future results. Market returns vary significantly year-to-year. These are long-term historical averages.
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⚠️ Important Disclaimer
This Portfolio Rebalancing Calculator provides estimates for educational and informational purposes only. Actual results may vary significantly based on individual circumstances, market conditions, regulatory changes, and other factors beyond the scope of this calculator.
The calculations and projections provided are based on assumptions and historical data that may not reflect future performance.Past performance does not guarantee future results.
This tool is not financial advice, tax advice, legal advice, or investment advice. For personalized guidance tailored to your specific situation, please consult with qualified professionals including:
- Certified Financial Planner (CFP)
- Certified Public Accountant (CPA) for tax matters
- Licensed attorney for legal matters
- Registered Investment Advisor (RIA) for investment decisions
Data Accuracy: All data sources, statistics, and rates were verified as accurate as of October 2025. Tax rates, market conditions, and other financial data change over time. Always verify current rates and consult official sources.
No Warranties: While we strive for accuracy, we make no warranties or guarantees regarding the accuracy, completeness, or reliability of any information provided. Use this tool at your own risk.