Rebalancing Calculator – Keep Your Portfolio on Target
The Rebalancing Calculator is designed to help investors keep their portfolio aligned with a chosen target allocation. Instead of guessing how much to buy or sell, this tool calculates precise adjustments, shows how to use new contributions efficiently, helps structure withdrawals, and lets you explore multi-year projections with annual rebalancing.
Over time, different assets grow at different rates. Stocks may outperform bonds, cash may remain flat, and alternative assets might experience larger swings. As a result, your actual allocation drifts away from your original plan. Rebalancing restores your desired risk profile and keeps your investment strategy consistent. This calculator brings clarity to the process and turns complex portfolio math into an easy workflow.
How the Rebalancing Calculator Works
This calculator supports four key portfolio management tasks:
- Simple Rebalancing: Rebalance your current portfolio back to target allocation using buys and sells.
- Rebalance with Contribution: Allocate new contributions to move closer to your target allocation without selling.
- Rebalance with Withdrawal: Plan withdrawals while staying as close as possible to your target weights.
- Multi-Year Projection: Model portfolio growth, annual contributions, and yearly rebalancing to targets.
You can add or remove asset rows dynamically, define your own labels (for example, “US Stocks”, “Intl Stocks”, “Bonds”, “REITs”, “Cash”), and specify current values and target percentages. The calculator automatically normalizes target weights so they can be slightly above or below 100% without breaking the logic.
Mode 1: Simple Rebalancing to Target Allocation
In the Simple Rebalancing tab, you enter each asset’s current value and target allocation percentage. The calculator first sums your portfolio value and then computes the target dollar amount for each asset based on normalized weights.
Rebalancing Formula
If the rebalance amount is positive, it represents how much to buy in that asset. If it is negative, it indicates how much to sell. The calculator also reports total dollars to buy, total dollars to sell, and the overall portfolio turnover as a percentage of total value.
Mode 2: Rebalance Using New Contributions
Many long-term investors prefer to rebalance using new contributions rather than selling existing holdings. In this mode, you enter the size of your contribution along with current values and target allocations. The calculator determines how far each asset is from its target and allocates the contribution across assets in a proportional way.
Contribution Allocation Logic
The calculator focuses on assets that are underweight (where the desired change is positive). It scales these desired changes so that the total equals your contribution, then shows how much of the new money should go into each asset to move closest to your target allocation.
This approach allows you to:
- Deploy new cash intelligently instead of spreading it evenly.
- Reduce the need to sell appreciated assets.
- Gradually restore your target allocation over time.
Mode 3: Rebalance with Withdrawals
During retirement or whenever you need to draw from your portfolio, it is helpful to withdraw in a way that keeps the portfolio close to target. In the withdrawal mode, you enter a withdrawal amount along with current values and target allocations.
Withdrawal Allocation Logic
The calculator focuses on selling from overweight assets (where the candidate withdrawal is positive) and scales these withdrawals so that the total matches your requested withdrawal amount. This helps you:
- Sell more from assets that have become overweight.
- Protect underweight or defensive positions.
- Maintain a balanced portfolio while funding your spending needs.
Mode 4: Multi-Year Projection with Annual Rebalancing
The multi-year projection mode helps you understand how your portfolio might evolve over time. You enter current asset values, target percentages, expected annual returns for each asset, an annual contribution amount, and the number of years to project. You also choose whether to rebalance each year.
Projection Framework
Each year, the calculator grows each asset by its expected return, allocates the annual contribution based on target allocation, and optionally rebalances back to target weights. At the end of the horizon, it reports the final portfolio value, total contributions, and total growth relative to your starting value plus contributions.
Why Rebalancing Matters
Rebalancing is a core part of disciplined investing. Without it, a strong bull market in one asset class can gradually change your risk profile. For example, a 60/40 portfolio might drift to 75/25 if stocks rally significantly, leaving you more exposed to downside risk than you intended.
Using a structured rebalancing process helps you:
- Maintain your chosen risk and return profile over time.
- Avoid emotional, ad-hoc allocation decisions.
- Systematically trim winners and add to laggards based on your plan.
- Integrate contributions and withdrawals into your long-term strategy.
How to Use This Rebalancing Tool Effectively
- Define your target allocation in percentage terms across your chosen asset classes.
- Enter up-to-date current values for each asset and adjust labels to match your portfolio.
- Use the Simple Rebalancing tab for a direct rebalance using buys and sells.
- Use the Contribution tab when you are adding new money and wish to rebalance via contributions.
- Use the Withdrawal tab when you need income from your portfolio and want to stay near your target weights.
- Use the Projection tab to explore long-term outcomes based on growth and contributions with annual rebalancing.
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Rebalancing Calculator FAQs
Frequently Asked Questions About Portfolio Rebalancing
Find answers to common questions about how to rebalance your portfolio, use contributions and withdrawals, and interpret multi-year projections.
Many investors rebalance once or twice per year or when allocations drift beyond specific thresholds. There is no single correct schedule; the right frequency depends on your costs, risk tolerance, and investment strategy. This calculator can help you analyze different rebalancing points by updating your current values regularly.
No. The calculator automatically normalizes your target percentages so that their relative proportions are preserved, even if the total is slightly above or below 100%. For example, entering 50%, 35%, and 20% still works; the tool will rescale them proportionally when computing target dollar amounts.
Rebalancing with contributions can reduce trading costs and taxes because you are adding to underweight positions without selling others. Over time, recurring contributions directed toward lagging assets can naturally steer your portfolio back toward its targets.
In retirement, you can use the withdrawal mode to decide which assets to sell when funding your spending needs. The calculator suggests withdrawing more from overweight positions, which may help manage risk while still providing the cash you need.
No. The projection mode is a planning tool based on your own return and contribution assumptions. Actual market returns will differ from estimates, sometimes significantly. Use projections as an educational guide rather than a forecast or guarantee.
No. This tool is for information and planning purposes only. It does not provide personalized investment or tax advice. Consider consulting a qualified financial professional before making important investment decisions.