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Portfolio Rebalancing

Free tool for portfolio rebalancing.
Easily calculate how to bring your assets back to the desired target percentages, either through selling excess assets or by adding new liquidity.

Asset Management

Easily enter and manage your financial assets with name, quantity and current price.

Target Allocation

Define target percentages for every asset in your ideal portfolio.

Automatic Calculation

Instantly get calculations to optimally rebalance your portfolio.

Why Rebalance Your Portfolio?

Periodic portfolio rebalancing is essential to maintain the desired risk level over time. When some assets perform better than others, their weight in the portfolio increases, altering the original allocation and potentially exposing you to greater or lesser risks than expected.

Rebalancing means selling assets that have exceeded the target and buying underweighted ones, automatically applying the "buy low, sell high" principle.

Risk control
Investment discipline

How Often Should You Rebalance?

The ideal rebalancing frequency depends on several factors, including asset volatility and transaction costs. In general, it's recommended to:

1

Periodic Rebalancing

Check your portfolio every 6-12 months and rebalance if necessary

2

Threshold Rebalancing

Intervene when an asset deviates 5-10% from the target

3

Opportunistic Rebalancing

Take advantage of new investments or withdrawals to rebalance

Frequently Asked Questions

Rebalancing a portfolio means bringing the percentages of your various assets back to their original target allocations. Over time, due to different investment performances, some assets can become overweight or underweight. Rebalancing serves to maintain the desired risk level.

Rebalancing is crucial for several reasons:

  • Maintains your risk level consistent with your goals.
  • Automatically applies the rule: "buy low, sell high".
  • Helps maintain investment discipline, avoiding hasty or emotional decisions.

Additionally, numerous studies show that a regularly rebalanced portfolio can offer a better risk/return ratio in the long term.

The choice depends on several considerations:

  • Selling: useful if you have significantly overweight assets or want to realize profits. Always consider tax implications and transaction costs.
  • Adding liquidity: ideal if you have new funds to invest or want to avoid selling existing positions. Can help you reduce tax impact.

The main costs to consider are:

  • Trading commissions on purchases and sales.
  • The bid-ask spread of financial instruments.
  • Taxes on any capital gains.
  • Currency exchange costs for foreign assets.

It's essential to balance rebalancing frequency with these costs to optimize net returns.

For non-fractionalizable assets (such as some stocks), you can:

  • Round quantities to the nearest whole number.
  • Consider similar ETFs that allow fractions.
  • Accept small temporary deviations from the target allocation.
  • Add liquidity to compensate and realign the portfolio.

Some of the best practices include:

  • Establish clear tolerance thresholds (e.g., ±5% from target allocation).
  • Rebalance through new investments to reduce costs.
  • Document the reasons behind each change.
  • Include rebalancing in a periodic portfolio review.
  • Always evaluate tax impact before acting.