Finance Tools
What It Does
Tells you exactly what to buy and sell to bring your portfolio back to its target allocation. Enter your asset classes (e.g., “US Stocks”, “Bonds”, “International”, “Cash”) with their current values and the percentages you want them to be, and the calculator computes the drift, the trade list, and the post-rebalance allocation. Two modes are supported: Sell and Buy (the classic full rebalance — sells over-weight assets and buys under-weight ones) and Cash Injection (uses only new contributions to buy under-weight assets — the most tax-efficient approach for taxable accounts).
How to Use It
- Pick your currency.
- Choose a rebalancing mode — Sell and Buy for a full rebalance, or Cash Injection if you only want to deploy new cash.
- Optionally enter the amount of fresh money you’re adding to the portfolio.
- Optionally set a drift threshold (e.g., 5 %) so only meaningful imbalances generate trades.
- Optionally add a commission per trade and toggle fractional shares.
- Edit the asset table: name each asset class, enter its current market value, and set its target allocation %. Use + Add asset for up to 20 rows.
- Make sure the target percentages sum to 100 % — the live indicator under the table tells you when they do.
- Click Calculate to see the trade list, or Clear to reset to the example portfolio.
- Use Copy Results to copy the trade plan, or Export CSV / Export Excel to save it.
Options Explained
| Option | Description |
|---|---|
| Rebalancing mode | Sell-and-Buy = sell over-weight assets and buy under-weight ones (preserves total value). Cash-Injection = only buy with new cash (no sells, tax-efficient) |
| New contribution | Fresh cash being added to the portfolio at rebalance time. Optional — set to 0 if you’re rebalancing existing holdings only |
| Drift threshold | Minimum drift (% from target) required to trigger a trade. Common values: 1–5 %. Use 0 to trade every drift; use higher to reduce trading frequency |
| Commission per trade | Flat fee charged per buy or sell. Used to compute total transaction cost; not deducted from individual asset values |
| Allow fractional shares | When ON, trade amounts are reported to the cent. When OFF, each trade amount is rounded to whole currency units for brokers without fractional-share support |
| Asset classes | The list of holdings being rebalanced. Each row needs a unique name, a current value, and a target percentage. Up to 20 rows are allowed |
| Target allocation % | The percentage of the total portfolio you want this asset to be after rebalancing. All targets must sum to exactly 100 % |
| Currency | Currency for all monetary values — affects the symbol shown on amounts. Does not perform any conversion |
About Portfolio Rebalancing
Over time, the assets in a diversified portfolio grow at different rates — equities tend to outperform bonds in bull markets, bonds outperform in downturns, and so on. As a result, the actual allocation drifts away from the original target, often increasing risk in ways the investor never intended (e.g., a 60 / 40 stocks/bonds portfolio quietly becoming 75 / 25 after a multi-year bull market).
Rebalancing is the discipline of periodically returning the portfolio to its target weights, either by selling over-weight assets and buying under-weight ones (Sell-and-Buy) or by directing new contributions to under-weight assets (Cash-Injection). Both methods restore the intended risk profile and have the side effect of systematically “buying low and selling high” — a powerful but often-neglected source of long-term returns.
Common Use Cases
- Annual or quarterly portfolio rebalancing
- Threshold-based rebalancing (e.g., when drift > 5 %)
- Deploying new contributions or dividends in tax-efficient ways
- Restoring target risk profile after major market moves
- Trade-list generation for execution at your broker
Frequently Asked Questions
How often should I rebalance?
Most studies suggest annual rebalancing strikes the best balance between maintaining your target risk profile and minimizing transaction costs/taxes. Threshold-based rebalancing (e.g., whenever any asset drifts more than 5 % from target) is another popular approach that reacts to market moves rather than the calendar.
When should I use Cash-Injection vs. Sell-and-Buy?
In taxable accounts, prefer Cash-Injection whenever possible — selling appreciated assets triggers capital-gains taxes that can erode returns. In tax-advantaged accounts (IRA, 401k, HSA), Sell-and-Buy is usually fine because there’s no tax drag on internal sales.
What drift threshold should I use?
Common values are 1–5 %. A 5 % threshold reduces trading frequency and minimizes costs but lets allocations drift further. A 1 % threshold keeps allocations very tight but triggers more trades. Most retail investors do well with a 5 percentage-point threshold.
Does rebalancing improve returns?
The primary benefit of rebalancing is risk control, not return enhancement. By forcing “buy low, sell high” behavior it can modestly improve risk-adjusted returns, but the effect is small — the discipline of maintaining your target allocation matters far more than precise rebalancing technique.