Portfolio Rebalancing Calculator
This multi-method portfolio rebalancing calculator helps you determine trades needed to align holdings with a target allocation, minimize unnecessary trades, and incorporate cash flows. It supports full target rebalances, threshold (band) rebalances, cash-flow-driven allocations, and a tax-aware minimal-sell estimate.
The calculator is intended for planning and illustration. It provides estimated trade amounts and cost/tax impacts based on the inputs you provide. It does not execute trades and does not replace professional tax or investment advice.
Compute desired holdings to match target percentages and show trade amounts required to reach targets.
Inputs
Results
Asset 1 trade amount
$0.00
Asset 2 trade amount
$0.00
Asset 3 trade amount
$0.00
Asset 4 trade amount
$0.00
Asset 5 trade amount
$0.00
| Output | Value | Unit |
|---|---|---|
| Asset 1 trade amount | $0.00 | currency |
| Asset 2 trade amount | $0.00 | currency |
| Asset 3 trade amount | $0.00 | currency |
| Asset 4 trade amount | $0.00 | currency |
| Asset 5 trade amount | $0.00 | currency |
Visualization
Methodology
Calculations use standard accounting of market values and percentage weights: current percent = holding value divided by total portfolio value. Desired value = total portfolio value times target percentage.
Transaction and tax effects are estimated as simple proportional factors applied to gross trades to present a net expected trade. These are approximations to aid decision making and should be calibrated against your brokerage fees and tax rules.
This tool follows secure engineering and accuracy guidance by referencing established standards for trustworthy computation and user data handling, including NIST guidance for secure system design and data integrity, ISO guidance for quality management of calculations, and IEEE best practices for clear numeric presentation and unit labeling. See citations for links.
Worked examples
Example: A portfolio with $10,000 total, Asset A current $3,000 with a 30% target requires desired value = $3,000 (no trade). If Asset A is $4,000 with a 30% target and total $10,000, then gross sell = $1,000; net sell after 0.1% transaction cost ≈ $999.
Example: With $500 available cash and an underweight B asset, the cash-flow method will allocate contributions proportionally to shortfalls so that new contributions increase the weight of underweighted assets without selling existing positions.
Key takeaways
Use the target-allocation method for a full rebalance, threshold method to limit trade frequency, cash-flow method to direct contributions without selling, and tax-aware mode to estimate minimal sells and tax impact.
Inputs for transaction costs and estimated tax rate should be calibrated to your actual broker fees and personal tax situation for better accuracy.
Further resources
Expert Q&A
Can I rebalance across multiple accounts or tax wrappers?
This calculator models holdings at the portfolio level. For multi-account or tax-wrapper-aware rebalancing, export the results and map each holding to its account. For tax optimization across wrappers, consult a tax advisor; the tax-aware mode provides a rough estimate only.
Are taxes and transaction costs exact?
No. Tax and transaction cost fields are user-supplied estimates. Tax calculation here is a simplified estimate; actual tax depends on lot-level cost basis, holding periods, local tax rules, and specific brokerage fees.
How should I choose a rebalancing threshold?
Common thresholds range from 3% to 10% depending on portfolio size and trading costs. Lower thresholds increase trade frequency. Consider transaction costs and tax consequences when selecting a band.
What are the calculator limits?
The tool supports up to five holdings for quick scenario planning. For larger portfolios, use a spreadsheet or specialized software that supports dynamic asset lists, lot-level tax tracking, and broker APIs.
Sources & citations
- NIST Computer Security and Data Integrity Frameworks — https://www.nist.gov
- ISO Quality Management and Measurement Standards — https://www.iso.org
- IEEE Standards and Best Practices for Numeric Presentation — https://www.ieee.org
- Occupational Safety and Health Administration (OSHA) — usability and safety guidance for interfaces — https://www.osha.gov
- U.S. Internal Revenue Service — general tax information — https://www.irs.gov