Rebalance
Maintain your target asset allocation
Portfolio Rebalancing
Portfolio rebalancing helps you maintain your target asset allocation by identifying which positions to buy or sell.
What is Rebalancing?
Over time, market movements cause your portfolio to drift from its target allocation:
- Winners grow - Become overweight
- Losers shrink - Become underweight
- Risk profile changes - May no longer match your goals
Rebalancing brings your portfolio back to target weights.
Using the Rebalance Tool
Step 1: Set Target Allocation
- Go to Rebalance from the sidebar
- Enter your target allocation for each asset:
| Symbol | Target % |
|---|---|
| AAPL | 25% |
| GOOGL | 25% |
| MSFT | 25% |
| BND | 25% |
- Ensure allocations sum to 100%
Step 2: Enter Current Holdings
Enter your current positions: - Symbol: Stock ticker - Shares: Number of shares owned - Current Price: Auto-fetched or manual entry
Or click Import from Broker to sync automatically.
Step 3: Generate Rebalance Plan
Click Calculate Rebalance to see: - Current vs. target allocation - Required trades (buy/sell) - Dollar amounts and share counts
Rebalance Results
Allocation Comparison
| Symbol | Current % | Target % | Difference |
|---|---|---|---|
| AAPL | 35% | 25% | -10% (Sell) |
| GOOGL | 20% | 25% | +5% (Buy) |
| MSFT | 30% | 25% | -5% (Sell) |
| BND | 15% | 25% | +10% (Buy) |
Trade Recommendations
| Action | Symbol | Shares | Amount |
|---|---|---|---|
| SELL | AAPL | 10 | $1,750 |
| SELL | MSFT | 5 | $1,500 |
| BUY | GOOGL | 8 | $1,200 |
| BUY | BND | 25 | $2,050 |
Rebalancing Methods
Percentage-Based
Rebalance when any asset drifts beyond a threshold:
| Threshold | Description |
|---|---|
| 5% | Tight - frequent rebalancing |
| 10% | Moderate - balanced approach |
| 20% | Loose - less frequent |
Calendar-Based
Rebalance on a schedule regardless of drift:
- Monthly - Active management
- Quarterly - Common choice
- Annually - Tax-efficient
Threshold + Calendar
Combine both: Check quarterly, rebalance only if drift > 5%.
Tax Considerations
Tax-Loss Harvesting
When selling losers: - Harvest losses to offset gains - Be aware of wash sale rules (30 days) - Consider tax lots
Tax-Efficient Rebalancing
- Use new contributions - Buy underweight assets
- Rebalance in tax-advantaged accounts - IRA, 401(k)
- Consider holding period - Long-term vs. short-term gains
Rebalancing Strategies
Full Rebalance
- Bring all assets exactly to target
- More trades, higher costs
- Most precise
Partial Rebalance
- Only adjust assets beyond threshold
- Fewer trades, lower costs
- Allows some drift
Cash Flow Rebalancing
- Use deposits/withdrawals to rebalance
- Buy underweight assets with new money
- Sell overweight assets for withdrawals
Using with Optimizer
- Run Portfolio Optimizer to find optimal allocation
- Click Apply to Rebalance
- Target allocation auto-populates
- Calculate rebalance trades
Saving Rebalance Plans
- Generate your rebalance plan
- Click Save Plan
- Access later from Saved Portfolios
- Execute when ready
Best Practices
- Set realistic thresholds - Too tight = excessive trading
- Consider transaction costs - Small rebalances may not be worth it
- Think about taxes - Especially in taxable accounts
- Automate reminders - Set calendar alerts to review
- Document your strategy - Know when and why you rebalance
Common Mistakes
| Mistake | Why It's Bad |
|---|---|
| Over-rebalancing | High costs, tax drag |
| Ignoring drift | Risk profile changes |
| Emotional timing | Selling winners too early |
| Forgetting costs | Transaction fees eat returns |