A portfolio’s actual mix drifts from its target as different assets grow at different rates — rebalancing is buying and selling to bring it back.
How it works
The total portfolio value is split according to the target percentages, and each asset’s target dollar value is compared against its current value — the difference is the trade needed, positive meaning buy and negative meaning sell.
What this does not include
This models a simple two-asset (stocks/bonds) portfolio — a real portfolio with several asset classes needs the same logic applied across every holding, and this calculator doesn’t account for tax consequences of selling appreciated assets in a taxable account.
How to use this calculator
- Enter current stock and bond values.
- Enter your target percentage allocation for each.
Frequently asked questions
Why does rebalancing matter?
Per the SEC source, it maintains your originally intended risk level — without it, a portfolio can drift toward whichever asset class has grown fastest, quietly taking on more risk than intended.
How often should I rebalance?
There’s no single answer — common approaches are on a fixed schedule (e.g. annually) or when an asset class drifts a set percentage from its target, whichever comes first.
Does rebalancing always mean selling stocks in a bull market?
Often, yes — which is exactly why it’s psychologically hard to do: it means trimming what’s been performing well to buy what hasn’t.
