Portfolio Rebalance Bands Calculator
Set tolerance bands around a target allocation and see whether an asset has drifted far enough to rebalance — and exactly how much to buy or sell.
How it works
Band = target ± tolerance · Rebalance if current < lower or current > upper · Trade = target value − current value
Rebalancing bands say: only trade when an asset drifts outside a set distance from its target, instead of on a fixed calendar. This cuts needless trades and taxes while still reining in risk when a holding runs away. When the weight breaches the band you trade back to the exact target weight — selling the winner or topping up the laggard by the dollar gap shown.
Worked example
On a $200,000 portfolio you want 60% in stocks with a ±5-point band, so the range is 55%–65%. Stocks have run up to 68%, breaching the top. Target value is $120,000 but you hold $136,000, so you sell $16,000 of stock to get back to 60%.
Frequently asked questions
Bands or calendar rebalancing — which is better?
Band (threshold) rebalancing reacts to actual drift, so it trades only when it matters and tends to reduce turnover and taxes versus rigid calendar rebalancing. Many investors combine them: check on a schedule but trade only if a band is breached.
Should I rebalance to the target or just to the band edge?
Rebalancing all the way to the target is the common choice and is what this tool computes. Rebalancing only to the near band edge trades less but lets drift persist; it is a valid, lower-turnover variant.
What band width should I use?
A common rule is ±5 percentage points for major asset classes, or a relative band like ±20% of the target weight for smaller sleeves. Wider bands mean fewer trades but more drift; pick what matches your risk tolerance.
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Educational estimate, not investment advice. Markets involve risk of loss and future returns are never guaranteed.