Work out the buys and sells needed to return a drifted portfolio to its target weights.
Rebalancing is mechanically simple: compute each target value from the new total and trade the difference. Turnover is half the sum of absolute trades because sales fund the purchases. Rebalancing forces selling what has risen and buying what has fallen, which is the discipline most investors find hardest and which supplies much of its benefit.
Portfolio Rebalancing
Trade per asset = total portfolio × target weight − current value
Trade per asset = total portfolio × target weight − current value Rebalancing is mechanically simple: compute each target value from the new total and trade the difference. Turnover is half the sum of absolute trades because sales fund the purchases.
Rebalancing forces selling what has risen and buying what has fallen, which is the discipline most investors find hardest and which supplies much of its benefit.
This calculator takes 5 inputs: Current equity value, Current bond value, Current cash value, Target equity weight, Target bond weight. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.