Portfolio Rebalancing Calculator

Understanding the Portfolio Rebalancing Calculator

Portfolio rebalancing is the disciplined process of buying and selling assets to return your portfolio to its original target asset allocation. Over time, market movements will cause some of your investments to grow faster than others, leading your portfolio to "drift" from its intended risk level. This calculator provides a clear, actionable plan to get your portfolio back on track.

How It Works

The calculator determines the necessary trades by comparing your current asset allocation to your target allocation.

• Asset Details: You list each asset in your portfolio, its current market value, and its target allocation percentage. The sum of all target allocations must equal 100%.

The Calculation

1. The tool first calculates the total value of your entire portfolio by summing the current value of all assets.
2. For each asset, it calculates the target dollar value by multiplying the total portfolio value by the asset's target allocation percentage (e.g., Total Value * (Target % / 100)).
3. Finally, it compares each asset's current value to its target value. If the current value is higher, it generates a "SELL" action for the difference. If the current value is lower, it generates a "BUY" action for the difference.

Following this plan helps you systematically adhere to the classic investment wisdom of "buy low and sell high," maintaining your desired risk exposure and keeping your financial plan aligned with your long-term goals.

Frequently Asked Questions