How to Use This Calculator
- 1
Enter Portfolio & Asset Values
Input your target portfolio value (initial investment), current dollar values for Asset A and Asset B, and the desired allocation percentage for each asset.
- 2
Review Results
See Portfolio Drift, Rebalance Asset A, and Rebalance Asset B cards. The Insights panel shows current vs target allocations, total portfolio value, rebalance turnover, gain/loss, and allocation spread.
Example Calculation
An investor has a $100,000 portfolio currently split $60,000 in Asset A and $40,000 in Asset B, but desires a 50/50 split for both assets.
Initial Investment ($)
100,000
Current Value of Asset A ($)
60,000
Desired Allocation — Asset A (%)
50
Current Value of Asset B ($)
40,000
Desired Allocation — Asset B (%)
50
Results
Portfolio Drift
10.00%
Rebalance Asset A
-$10,000.00
Rebalance Asset B
$10,000.00
Insights card shows 60.
Tips
10% Drift Means You Need to Move $10,000 Between Assets
With a 60/40 actual split vs 50/50 target, selling $10,000 of Asset A and buying $10,000 of Asset B restores the target. That's 10% rebalance turnover — moving 10% of total portfolio value. A 5% drift threshold would trigger rebalancing at $5,000 of required trades.
Use New Contributions to Rebalance Without Selling
If you add $10,000 monthly, directing it entirely to Asset B for one month eliminates the drift without selling Asset A. This avoids triggering capital gains on the $10,000 sale. Over 12 months of $10,000 contributions, you'd add $120,000 — enough to offset even large drifts.
Rebalance in Tax-Advantaged Accounts First
Selling $10,000 of appreciated Asset A in a taxable account at 15% capital gains rate costs $1,500 in taxes. The same trade in a 401(k) or IRA costs $0. If your portfolio spans both account types, execute rebalancing trades in tax-advantaged accounts to preserve returns.
Calendar vs Threshold Rebalancing — Which Costs Less
Annual rebalancing (calendar) executes one trade per year regardless of drift. Threshold rebalancing (e.g., at 5% drift) only trades when necessary. Studies show threshold-based rebalancing typically reduces trading costs by 30-50% compared to quarterly calendar rebalancing while maintaining similar risk control.
How to Rebalance Your Portfolio Back to Target
The Asset Allocation Rebalancing Calculator calculates exactly how much to buy or sell to restore your target allocation.
With a $100,000 portfolio split $60,000/$40,000 but targeting 50/50, the portfolio drift is 10% — you need to sell $10,000 of Asset A and buy $10,000 of Asset B.
The 10% rebalance turnover means moving 10% of total portfolio value.
The Rebalancing Formulas
Three steps determine rebalance amounts:
Current Allocation (%) = Current Value / Total Portfolio × 100
Target Value = Initial Investment × Target Allocation / 100
Rebalance Amount = Target Value - Current Value
Additional metrics:
Portfolio Drift = Max(|Current Alloc A - Target A|, |Current Alloc B - Target B|)
Rebalance Turnover = (|Rebalance A| + |Rebalance B|) / (2 × Portfolio) × 100
Example: Rebalancing a $100,000 Portfolio
$100,000 target portfolio, $60,000 in Asset A, $40,000 in Asset B, 50/50 target allocation:
| Metric | Value | Context |
|---|---|---|
| Portfolio Drift | 10.00% | Significant — rebalancing is urgent |
| Rebalance Asset A | -$10,000 | Sell $10,000 of Asset A |
| Rebalance Asset B | +$10,000 | Buy $10,000 of Asset B |
| Current Allocation A | 60.0% | 10pp overweight vs 50% target |
| Current Allocation B | 40.0% | 10pp underweight vs 50% target |
| Rebalance Turnover | 10.0% | Moderate trade volume |
| Portfolio Gain/Loss | $0 | Current value equals target |
| Allocation Spread | 0pp | Equal target weights |
The 10% drift exceeds the common 5% threshold, triggering a rebalancing event.
The symmetrical $10,000 trades mean selling overweight Asset A and buying underweight Asset B — a natural "sell high, buy low" discipline.
When to Rebalance: Drift Thresholds
The calculator classifies drift into three zones: minimal (under 2%) means the portfolio is well balanced — no action needed.
Moderate (2-5%) signals the allocation has shifted enough to warrant attention.
Significant (over 5%) indicates urgent rebalancing — the portfolio's risk profile has meaningfully changed.
Most financial advisors recommend using a 5% threshold as the trigger point, which balances risk control against transaction costs.
Frequently Asked Questions
What is portfolio drift?
The difference between your actual and target asset allocation. With 60% in Asset A but a 50% target, drift is 10%. The calculator shows the maximum drift across all assets. Below 2% is minimal, 2-5% is moderate, above 5% signals urgent rebalancing.
How is the rebalance amount calculated?
Target Value = Portfolio × Target %. Rebalance = Target Value - Current Value. For Asset A: $100,000 × 50% = $50,000 target. $50,000 - $60,000 current = -$10,000 (sell). For Asset B: $50,000 - $40,000 = +$10,000 (buy). The amounts always mirror each other in a two-asset portfolio.
How often should I rebalance?
Two main approaches: calendar-based (annually or quarterly) or threshold-based (when drift exceeds 5%). Research shows annual rebalancing captures most of the benefit with minimal trading costs. Threshold-based is more responsive but requires monitoring. Many advisors recommend checking quarterly but only acting if drift exceeds 5%.
What is rebalance turnover?
The percentage of portfolio value being traded during rebalancing. Calculated as total trade volume divided by twice the portfolio value. At 10% turnover, you're moving $10,000 in a $100,000 portfolio. Higher turnover means more transaction costs and potential tax events.
Should target allocations always sum to 100%?
Yes — if targets don't sum to 100%, the calculator allocates based on the percentages entered, which may leave money unallocated or require more than available. With 50/50 targets on $100,000, each asset gets exactly $50,000. With 60/50 targets (110%), the calculator would try to allocate $110,000 across assets.
What if my portfolio has gained or lost value?
The calculator uses your Initial Investment as the target portfolio size, not the sum of current values. If Asset A ($60,000) + Asset B ($40,000) = $100,000 but your target is $100,000, the rebalance amounts assume you want $100,000 total. If your target were $120,000, you'd need to add $20,000 in new capital plus rebalance.