Portfolio Rebalancing Calculator
Enter your target allocations and current values to see exactly what to buy or sell — or how to rebalance using new contributions only.
| Asset | Current % | Target % | Drift | Action |
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Why and When to Rebalance
Over time, assets that perform well grow to represent a larger share of your portfolio than intended. A portfolio that started at 80% stocks / 20% bonds might drift to 90% / 10% after a strong bull market — increasing your risk beyond your original plan. Rebalancing restores your intended risk profile.
Common rebalancing triggers: (1) Annually — pick a date and check each year. (2) Threshold-based — rebalance whenever any asset drifts more than 5 percentage points from its target. Research suggests threshold rebalancing is slightly more efficient than calendar-based rebalancing.
Tax Implications of Selling to Rebalance
In taxable accounts, selling appreciated assets to rebalance triggers capital gains tax. Short-term gains (assets held under 1 year) are taxed as ordinary income; long-term gains (over 1 year) are taxed at 0%, 15%, or 20% depending on your income. In tax-advantaged accounts (401k, IRA), you can rebalance freely without tax consequences.
Contribution-Based Rebalancing: A Tax-Efficient Alternative
Instead of selling over-weighted assets, you can direct new contributions entirely to under-weighted assets until allocation is restored. This avoids triggering capital gains and can be just as effective if you're still in an accumulation phase. This calculator's "New Contributions Only" mode shows exactly how to deploy new money to move toward your target.