How to use the portfolio rebalancing calculator
- List each holding with its current value and the target share you want it to have. The targets must add up to 100%.
- Enter any new money to add. Use a negative number to take money out.
- Choose Buy and sell to bring every holding exactly to target, or Only buy to use new money without selling anything.
- Read the trades table for what to buy and sell, then check the share after for each holding.
Formula
value after = total now + new money
target value of a holding = target share x value after
trade = target value - current value
buy only: top up holdings below a common level L, where L = (new money + their values) / (their target shares)
In buy only mode, holdings that are already above their share are left alone. The common level L is found by removing every holding above it and solving again until nothing changes.
Rebalancing a $100,000 portfolio
The holdings are $52,000 in a US stock fund (target 50%), $18,000 international stocks (20%), $24,000 bonds (25%) and $6,000 cash (5%). With no new money and both buying and selling, sell $2,000 of the US fund, buy $2,000 of international stocks, buy $1,000 of bonds and sell $1,000 of cash. Every holding ends at its target and the trades net to zero.
Now add $5,000 and choose Only buy. Cash is above its share and cannot be sold, so it stays at $6,000. The other three funds share the new money as if they were the whole portfolio: ($52,000 + $18,000 + $24,000 + $5,000) / 95% = $104,210.53, which gives them targets of $52,105.26, $20,842.11 and $26,052.63. The buys are $105.26, $2,842.11 and $2,052.63, they add up to $5,000.00, and nothing is bought for cash. The US fund ends just under its 50% share, which is the cost of not selling.
Rebalancing by contributions instead of sales
Putting new money into the holdings that have fallen behind is the simplest way to rebalance. It moves the mix toward target without selling anything, which can avoid trading costs and, in some accounts, taxes on gains. The catch is that if the new money is small compared with the drift, the portfolio does not reach target. The page shows the resulting shares so you can see how far it got.
When selling is allowed, the trades are exact. A holding that has grown to 52% of the portfolio when the target is 50% is trimmed by exactly the excess, and the proceeds go to the holdings below target.
What this does not decide
The page works out arithmetic from the numbers you enter. It does not choose targets, decide when to rebalance or consider taxes, fees, minimum purchase sizes or whole-share rounding. Those depend on your accounts and plans. Related tools include the Two Asset Portfolio Calculator, which shows risk and return for a two-way mix, and the Dollar Cost Averaging Calculator.
Assumptions and limits
- Values are the current market values you enter, and targets are shares of the whole portfolio after the new money.
- Trades are rounded to cents and add up exactly to the new money. A leftover cent goes to the largest trade.
- In buy only mode, the new money must be zero or more. Holdings with a target of 0% are left alone.
- Taxes, costs, share prices and minimum trade sizes are not modeled. The result is arithmetic, not advice.
Frequently asked questions
What if my targets do not add to 100%?
The page asks you to fix them. It shows the total it found, for example 95%, so you can see which holding needs more. It never scales the targets silently.
Why do some holdings stay off target in buy only mode?
Without selling, a holding that is above its share cannot go down. The new money can only lift the others, so a small contribution may not close a large gap. Add more money or allow selling to reach target.
Can I take money out of the portfolio?
Yes. Enter a negative amount in new money and use Buy and sell. The page sells in proportion to what brings every holding to its target after the withdrawal.
Does the order of the holdings matter?
No. Each holding is treated on its own, apart from where an odd cent goes, which is assigned to the largest trade.