Portfolio Rebalancing Calculator

The formula

Rebalancing is the simplest math in portfolio management. For each holding:

total      = Σ currentValue_i (+ contribution in contribution mode)
targetValue_i = total × targetPct_i / 100
trade_i      = targetValue_i − currentValue_i

A positive trade is a buy; a negative trade is a sell. In sell/buy mode, the trades net to exactly zero — every dollar sold funds a dollar bought. In contribution mode, the trades net to exactly the contribution amount. Nothing is projected: no return assumptions, no inflation, no time horizon. This tool computes a snapshot in today’s dollars using only the values you enter.

Sell & buy to target

The default mode. Computes the exact set of sells and buys that brings every holding to its target allocation in one step. Every dollar raised by selling an overweight asset funds a dollar of underweight buying — the net trade is zero. This works in any account type but can realize capital gains on sells in a taxable account.

Example: 60/40 portfolio drifted to 68/32. Stock trade: −$8,000 (sell). Bonds trade: +$8,000 (buy). Net: $0.

Rebalance with a contribution

Directs new cash to underweight assets first. The contribution increases the portfolio total, which lifts all target values, and the same identity computes the trades on the new total. Contribution mode reduces sells — and in many cases eliminates them — making it the tax-efficient method recommended by the Bogleheads community and most fee-only advisors.

Contribution mode does not always eliminate sells. If an overweight asset’s target value (which rises as the total grows) is still below its current value, a residual sell is required. This is shown explicitly rather than hidden.

Example: same 68/32 portfolio, +$10,000 contribution. New total: $110,000. Stock target: $66,000 (still below $68,000 current) — sell $2,000. Bonds target: $44,000 — buy $12,000. Net: +$10,000 = contribution.

The 5/25 drift rule (Swedroe)

The band indicator answers a prior question: “does this allocation need rebalancing at all?” Larry Swedroe’s 5/25 rule, as documented on the Bogleheads wiki, defines two thresholds:

• Large allocations (target ≥ 20%): trigger when the absolute drift reaches 5 percentage points. A 60% target at 65% is at the boundary.
• Small allocations (target < 20%): trigger when the relative drift reaches 25%. A 10% target at 13% is 30% relative drift — out of band, even though the absolute drift (3 pp) would not trigger the large-allocation rule.

The bands are a labeled indicator alongside the trade output, not a gate. Trades always compute to exact target regardless of band status. An asset can require a corrective trade while still being “in band” — the band tells you whether the drift was large enough to warrant action under the rule.

Tax-aware rebalancing order

If you hold these assets across multiple account types, the standard ordering minimizes capital-gains exposure:

1. Tax-advantaged accounts first (Traditional IRA, Roth IRA, 401(k)): buy and sell freely — no capital-gains consequences.
2. New contributions in taxable accounts: buy underweight assets without selling anything. Use contribution mode here.
3. Sell in taxable accounts last, and only as needed. Sells may realize short- or long-term capital gains. This tool flags sells with a SELL badge but does not compute a tax liability — that requires per-lot cost basis, holding period, your bracket, and the current year’s rates.

Assumptions and limitations

• Nothing is projected. No return assumptions, inflation, or time horizon. The tool computes a snapshot using only the values you enter.
• Current values are user-entered. Market prices change; your inputs are only as current as when you check your brokerage.
• Capital-gains tax is not modeled. Sells are flagged; tax liability is not computed. See the tax-aware ordering note above.
• Transaction costs and bid/ask spreads are not modeled. Negligible for most ETFs but nonzero for individual securities and some mutual funds.
• Dollar-denominated, not share-based. No live prices or tickers needed — the tool is fully keyless and asset-agnostic.
• 5/25 bands are one heuristic, not a universal rule. Transaction costs, taxes, and individual risk tolerance all affect whether a drift is worth acting on.
• Targets must sum to exactly 100%. This calculator never silently rescales your targets — a mismatch is shown and the calculation is blocked until you fix it.

Sources: Bogleheads: Rebalancing (5/25 rule, Swedroe attribution) · SmartAsset: Rebalancing your portfolio the right way · White Coat Investor: How to rebalance your portfolio

Last reviewed: June 2026. No jurisdiction- or date-sensitive figures — the rebalancing identity and the 5/25 rule are not rate or tax values.

This tool is for informational and educational purposes only. It is not financial, tax, or legal advice. Rebalancing decisions depend on your tax situation, account types, time horizon, and risk tolerance. Consult a qualified financial or tax professional before acting.