Portfolio rebalance calculator
Enter your current holdings and target allocation. See exact buy/sell amounts to rebalance — or use new contributions to drift back toward target without selling.
The 5% drift rule
Vanguard's standard rebalancing trigger: when any asset class drifts more than 5 percentage points from its target. A 60% stock target rebalances at 65% (too high — sell stocks) or 55% (too low — buy stocks). This avoids overtrading on small daily wiggles while still keeping risk within tolerance.
Tighter triggers (1-3% drift) add transaction costs and taxes without meaningfully improving returns. Wider triggers (10%+) let risk creep significantly off target. 5% is the empirical sweet spot from multiple academic studies.
Three ways to rebalance (cheapest first)
- 1. Redirect new contributions. Free of taxes and transaction cost. If you're saving $1,000/mo and bonds are underweight, direct all $1,000 to bonds until balance hits target. Then split contributions again.
- 2. Rebalance in tax-advantaged accounts only. 401(k), Traditional IRA, Roth IRA, HSA — no capital gains tax on internal trades. Sell stocks and buy bonds within the same account: zero tax friction.
- 3. Sell in taxable accounts. Triggers capital gains tax (long-term 0/15/20% federal). Save this for when methods 1-2 can't close the gap, or when you're harvesting losses anyway.
Common target allocations
| Strategy | Stocks | Bonds | Cash / other |
|---|---|---|---|
| Aggressive (age 20-35) | 90% | 10% | 0% |
| Growth (age 35-50) | 80% | 20% | 0% |
| Balanced (age 50-60) | 60% | 35% | 5% |
| Conservative (age 60+) | 40% | 50% | 10% |
| Three-fund (Bogleheads) | 60% (40 US + 20 intl) | 40% | 0% |
| All-Weather (Dalio-style) | 30% | 55% (15 IT + 40 LT) | 15% commodities/gold |
The behavioral case for rebalancing
Mechanical rebalancing forces you to sell appreciating assets (high prices) and buy depreciating ones (low prices). It's the only legitimate "buy low, sell high" strategy that doesn't require timing the market. The hard part is emotional: rebalancing in March 2020 (buying stocks after a 30% drop, selling bonds) felt insane in the moment but generated enormous excess returns by 2022. A written rule keeps you from second-guessing the math when markets are scary.
Related calculators
- Net worth calculator — total picture across all accounts
- Capital gains tax calculator — what you'll owe if rebalancing in taxable accounts
- Sequence of returns calculator — why allocation matters most near retirement