Rebalancing Simulator Calculator
Simulate portfolio rebalancing to maintain your target asset allocation. This rebalancing simulator calculator shows exactly what to buy and sell to get your portfolio back on track.
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Portfolio Settings
Auto-calculated from assets below
Rebalance if drift exceeds this amount
Optional: cost per trade as % of trade value
Asset Allocations
Target percentages should sum to 100%
Rebalancing Summary
Actions Required:
❌ Invalid Allocation
Your target percentages sum to 0.00% instead of 100%. Please adjust your target allocations.
Understanding Portfolio Rebalancing
Why Rebalance?
Over time, strong-performing assets grow to represent a larger portion of your portfolio, increasing risk. Rebalancing sells winners and buys underperformers to maintain your target risk level and enforce disciplined investing.
When to Rebalance
Common strategies include calendar rebalancing (quarterly or annually) and threshold rebalancing (when any asset drifts 5%+ from target). Threshold rebalancing reduces unnecessary trades while keeping portfolios aligned during volatile periods.
Rebalancing Methods
You can rebalance by selling overweight positions and buying underweight ones, or by directing new contributions to underweight assets. The latter approach minimizes transaction costs and tax implications in taxable accounts.
Tax Considerations
Rebalancing in taxable accounts triggers capital gains. Consider rebalancing in tax-advantaged accounts (401k, IRA) first, or use tax-loss harvesting to offset gains. New contributions can rebalance without selling appreciated assets.
Rebalancing Bands
Setting tolerance bands (e.g., 5%) prevents over-trading. If your 60% stock allocation drifts to 63%, you may not need to act. But if it hits 67%, rebalancing becomes important. Wider bands reduce costs; narrower bands maintain tighter control.
Costs vs. Benefits
Frequent rebalancing incurs transaction costs and potentially taxes. Research suggests annual or threshold-based rebalancing provides most benefits while minimizing costs. Use this rebalancing simulator calculator to model different scenarios before acting.
Note: This rebalancing simulator calculator is for educational purposes. It does not account for all factors like specific tax situations, wash sale rules, or individual security restrictions. Consider your personal circumstances and consult a financial advisor before making changes to your portfolio.
Disclaimer: This calculator is for educational and illustrative purposes only. Results are estimates and may not reflect actual outcomes. Investing Point does not guarantee the accuracy of these calculations and is not responsible for any decisions made based on this tool.
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