Portfolio Allocation Calculator

Divide each holding's current value by the total portfolio value and multiply by 100: $68,000 of stocks in a $100,000 portfolio is a 68% allocation. The calculator does this for every holding at once and shows the result beside your target, so you can see the gap — 8 points over a 60% target in that case.

Drift is the gap in percentage points between your current allocation and your target. If your target is 60% stocks and stocks have grown to 68% of the portfolio, you have drifted 8 points overweight. Drift builds naturally because assets grow at different rates; it is not a problem in itself, but it means your actual risk has moved away from what you intended.

There is no single correct answer. The main approaches are calendar rebalancing, on a fixed schedule such as yearly, and threshold rebalancing, whenever a holding drifts a set distance such as 5 points. In a tax-advantaged account rebalancing has no tax cost; in a taxable account, selling appreciated holdings realises gains. Many investors check yearly and rebalance only if a threshold has been crossed.

Direct new money — contributions, bonuses, dividends — to the underweight holdings. Buying more of them raises their share without selling the overweight ones and realising gains. Enter the amount under Advanced and the calculator sends it to the most underweight holding first, then the next: $5,000 into a portfolio short $13,500 of stocks all goes to stocks.

Target asset allocation is the share of your portfolio you intend to hold in each asset class — for example 60% stocks, 30% bonds and 10% cash. The right target depends on your goals, time horizon and risk tolerance. This calculator does not suggest one; it takes the targets you enter and shows how your holdings compare. The SEC's Investor.gov explains how allocation, diversification and rebalancing fit together.

Not reliably — its main job is controlling risk. Rebalancing stops one asset class from growing to dominate the portfolio. Its effect on returns depends on how markets move: when assets swing back and forth it can help by buying after falls, and in a long one-way trend it lags by trimming the winner. Judge it by whether it keeps the risk you chose, not by return.

A 60/40 portfolio holds 60% stocks and 40% bonds, a common moderate-risk benchmark that combines growth from stocks with steadier bond income. Model it with two holdings at 60% and 40% targets and your current values. The calculator makes no recommendation about whether 60/40 suits you; it shows how far your mix has drifted from whatever target you set.

The limit is 8. For a larger portfolio, group holdings by asset class — add all U.S. stock funds into one "US stocks" row, all bond funds into "Bonds", and so on. That gives an accurate picture at the asset-class level, which is usually where rebalancing decisions are made; within a class you can then decide which fund to buy or sell.

Only when you sell an appreciated holding in a taxable account; rebalancing inside a 401(k), IRA, HSA or 529 has no tax effect. Selling a fund bought for $40,000 and now worth $60,000 realises a $20,000 gain, taxed at the long-term rates of 0%, 15% or 20% if held more than a year, or at ordinary rates if not (IRS Topic 409). Directing new money to underweight assets avoids the sale.

Threshold rebalancing acts on drift, not the calendar. The 5/25 rule of thumb rebalances a holding when it drifts 5 percentage points in absolute terms or 25% of its target, whichever comes first. A 60% stock target triggers at 55% or 65%; a 10% target triggers at 7.5% or 12.5%, because 25% of 10 is 2.5 points — so small positions are not ignored.

Multiply each target percentage by the total portfolio value for its target amount, then subtract the current value: positive is a buy, negative a sell. A $100,000 portfolio with a 60% stock target should hold $60,000; at $68,000, sell $8,000 and move it to the holdings below target. In a full rebalance the buys and sells net to zero.

Yes, on the same schedule as the rest of your portfolio, and it is easier there because trades inside a 401(k) create no taxable gains. Many plans offer automatic rebalancing, and target-date funds rebalance internally. If you hold a 401(k), an IRA and a taxable account, treat them as one portfolio and make the tax-free trades in the retirement accounts, so the taxable account rarely needs a sale.