What this calculator shows you
- Exact Trades
- Buy and sell amounts for every fund
- No-Sell Option
- Rebalance with new money to avoid capital gains
- Drift Check
- Flags any fund off by your chosen threshold
- Never-Rebalance Demo
- Watch a 60/40 portfolio drift over time
What Rebalancing Is
You pick a mix, say 60% stocks and 40% bonds. Then markets move: if stocks rise faster, they become a bigger share than you planned, and your portfolio is riskier than you chose. Rebalancing means trading back to your target mix, usually by selling some of what grew and buying what lagged.
How Often
There is no perfect schedule. Vanguard's research found little difference between rebalancing monthly, quarterly, or yearly, except that more frequent rebalancing costs more in trades and time. A common approach: check once or twice a year, and rebalance when any fund is off its target by 5 percentage points or more.
Rebalancing Without Taxes
Inside a 401(k) or IRA, trades aren't taxed, so rebalancing is free. In a regular brokerage account, selling an investment that has grown can trigger capital gains tax. You can often avoid that by sending new contributions, and dividends, to whichever fund is furthest below its target.
What If You Never Rebalance?
The mix drifts toward whatever grows fastest, usually stocks. In Vanguard's study of 1926 to 2009, a 60/40 portfolio that was never rebalanced averaged about 84% stocks and ended near 98%. It earned a little more, but with noticeably bigger swings than the investor signed up for.
Questions people ask
Do target-date funds rebalance for me?
Yes. A target-date fund or a balanced fund rebalances on its own, so you don't need to. This calculator is for people who hold several funds and manage the mix themselves.
Does rebalancing increase returns?
Not reliably. Its job is to keep your risk where you chose it. A portfolio left alone often drifts toward more stocks, which can mean higher returns and bigger drops.
Should I rebalance after a market drop?
If your mix is off by your threshold, yes. That usually means buying stocks after they fall, which is hard to do emotionally, and is exactly why a written rule helps.
Education only, not personalized financial, tax or investment advice. Results are estimates based on the numbers you enter; real returns vary and losses happen.