Markets drift your allocation away from its targets. Enter current values and target weights and the calculator tells you exactly how much of each asset to buy or sell.
Rebalancing enforces buy-low-sell-high discipline mechanically. Doing it on a schedule (yearly) or at a drift threshold (5 percentage points) are both common policies.
In taxable accounts, consider rebalancing with new contributions instead of sales to avoid realizing capital gains.
Rebalancing is risk control first and a return strategy second. The "rebalancing bonus" is real but small, and it depends on the assets involved — it can be negative when one holding trends upward for years. What it reliably does is stop a portfolio that started at 60/40 from arriving at retirement as 85/15 because equities ran.
Bands beat calendars when markets move sharply and cost more in trading when they do not, which is why checking quarterly but acting only past a five-point drift is a common compromise. Whichever policy you pick, write it down before the market tests it: the moment rebalancing feels wrong is usually the moment it is doing its job.
Rebalancing across accounts rather than within each one usually costs less. If the same allocation is held in a taxable account and a pension, selling inside the pension and adjusting contributions outside it reaches the same target weights without realising a gain anywhere.
Frequently asked questions
How often should I rebalance my portfolio?
Once a year, or when an asset drifts a set amount (say five percentage points) from target. Both work; more frequent rebalancing mostly adds costs, not returns.
Why rebalance at all?
To control risk: winners quietly grow into an allocation riskier than you chose. Rebalancing also mechanically sells high and buys low, without requiring forecasts.
How do I rebalance without triggering taxes?
Direct new contributions into the underweight assets instead of selling winners, and do any selling inside tax-advantaged accounts where possible.