# Asset Allocation Rebalancer > Calculate exactly how much to buy or sell in each asset class to rebalance your portfolio back to target allocation — with optional new cash to invest. **Category:** Finance **Keywords:** asset allocation, portfolio rebalance, rebalancing calculator, target allocation, portfolio allocation, investment rebalance, stocks bonds, asset mix, portfolio drift, rebalance trades **URL:** https://complete.tools/asset-allocation-rebalancer ## How it calculates The core formula is straightforward: Trade Amount = (Target % x Total Portfolio Value) - Current Value. For each asset class, the calculator multiplies your target percentage by the total portfolio value (which includes any new cash you are contributing) to find the dollar amount that asset should represent. It then subtracts the asset's current value. A positive result means you need to buy more of that asset; a negative result means you need to sell. Total portfolio drift is calculated as the sum of the absolute differences between each asset's current percentage and its target percentage, divided by two. This single number captures how far the overall portfolio has wandered from the plan. The division by two prevents double-counting, since every overweight position is offset by an underweight position elsewhere in the portfolio. The calculator also tracks whether your target percentages sum to exactly 100%. If they do not, it flags a warning so you can correct the targets before executing trades. Current allocation percentages are computed relative to the total portfolio value including new cash, ensuring the rebalance accounts for the full amount that will be invested. ## Who should use this Individual investors who manage their own brokerage or retirement accounts and want a disciplined, math-based approach to staying on target. Financial advisors preparing rebalancing recommendations for clients during quarterly or annual reviews. Anyone contributing new money to an investment account who wants to direct the deposit efficiently across asset classes rather than dumping it all into one fund. People approaching retirement who need to gradually shift from growth-oriented to income-oriented allocations and want to know the exact trades required at each step. DIY investors following a Boglehead-style or target-date strategy who want to manually replicate the automatic rebalancing that a target-date fund would do internally. ## Worked examples Example 1 - Simple three-fund rebalance with no new cash: Suppose you hold $60,000 in US Stocks, $20,000 in International Stocks, and $20,000 in Bonds. Your targets are 50% US Stocks, 30% International Stocks, and 20% Bonds. The total portfolio is $100,000. Target values are $50,000, $30,000, and $20,000 respectively. The trades are: sell $10,000 of US Stocks, buy $10,000 of International Stocks, and hold Bonds (already at target). Total drift is 10%. Example 2 - Rebalance with new cash contribution: Same portfolio as above, but you also have $10,000 in new cash to invest. The new total is $110,000. Target values become $55,000 (US Stocks), $33,000 (International), and $22,000 (Bonds). Trades: sell $5,000 US Stocks, buy $13,000 International Stocks, and buy $2,000 Bonds. The new cash reduced the amount you need to sell from US Stocks compared to Example 1, which is helpful for minimizing taxable events. Example 3 - Four-asset portfolio with REIT exposure: You hold $40,000 US Stocks, $25,000 International Stocks, $30,000 Bonds, and $5,000 REITs. Targets are 40%, 20%, 30%, and 10%. Total is $100,000. Target values: $40,000, $20,000, $30,000, $10,000. Trades: hold US Stocks, sell $5,000 International Stocks, hold Bonds, buy $5,000 REITs. Only two trades needed. ## Limitations This calculator does not account for transaction costs such as brokerage commissions, bid-ask spreads, or fund redemption fees. In accounts where trades incur costs, very small rebalancing moves may not be worth executing. It also does not consider tax consequences: selling appreciated assets in a taxable account triggers capital gains taxes, which can erode the benefit of rebalancing. Investors should consider whether to prioritize rebalancing within tax-advantaged accounts first. The tool assumes you can buy and sell fractional dollar amounts in each asset class. In practice, some investments (individual stocks, ETFs) trade in whole shares, so the actual trade amounts may need rounding. Additionally, the calculator does not factor in pending dividends, accrued interest, or settlement times, all of which can affect the final account balances after trades settle. Target allocations must be entered manually. The tool does not recommend what your allocation should be based on your age, risk tolerance, or financial goals. It only tells you how to get back to the targets you set yourself. ## FAQs **Q:** How often should I rebalance my portfolio? **A:** Most financial experts recommend reviewing your allocation quarterly or semi-annually and rebalancing when any single asset class has drifted more than 5 percentage points from its target. Some investors prefer a calendar-based approach (for example, once per year), while others use a threshold-based approach and only rebalance when drift exceeds a specific limit. Either method works well as long as it is applied consistently. **Q:** Does adding new cash help reduce the number of sell trades? **A:** Yes. When you contribute new cash, the total portfolio value increases, which raises the target dollar amounts for underweight asset classes. This often means you can direct the new money into underweight positions and reduce or eliminate the need to sell overweight positions. This is especially beneficial in taxable accounts where selling triggers capital gains. **Q:** What if my target allocations do not add up to 100%? **A:** The calculator will flag a warning indicating the total. You should adjust your target percentages until they sum to exactly 100% before relying on the trade instructions, because the math assumes the full portfolio is allocated. If they sum to less than 100%, the unallocated portion effectively represents a cash drag; if they sum to more than 100%, the calculated trades will require more capital than is actually available. **Q:** Can I use this for multiple accounts or just one? **A:** The calculator works on a single portfolio at a time. If you manage your asset allocation across multiple accounts (for example, a 401k, an IRA, and a taxable brokerage account), you have two options. You can enter the combined totals across all accounts and then manually decide which account to execute each trade in, or you can run the calculator separately for each account with account-specific targets. **Q:** Should I rebalance during a market downturn? **A:** Rebalancing during downturns is actually one of the core benefits of a disciplined allocation strategy. It forces you to buy asset classes that have dropped in value (and are therefore underweight) while trimming those that have held up better (and are now overweight). This systematic buy-low-sell-high behavior can improve long-term returns, though it requires the emotional discipline to act when markets are volatile. **Q:** What is portfolio drift and why does it matter? **A:** Portfolio drift is the gradual movement of your actual asset allocation away from your intended target allocation, caused by differing returns across asset classes. A portfolio that starts at 60% stocks and 40% bonds might drift to 70/30 after a strong stock market run. Higher drift means your portfolio carries different risk characteristics than you planned for, which could lead to larger losses in a downturn or lower returns than expected from an overly conservative tilt. --- *Generated from [complete.tools/asset-allocation-rebalancer](https://complete.tools/asset-allocation-rebalancer)*