Rebalancing Trigger Calculator

Threshold rebalancing acts on how far a portfolio has moved rather than on the calendar. This tool compares the gap between the current and target stock weight against a threshold you set, and reports whether the gap has passed it. A threshold sits between two failure modes: too wide and drift accumulates unchecked, too narrow and the portfolio is traded on movements small enough that costs outweigh the correction.

On the sample figures a 60% target sits against a 67% current weight, so the drift is 7 points and the 5-point threshold is passed: the tool reports REBALANCE NOW. The same portfolio at 64% has drifted 4 points and reports Hold. The comparison is strict, so a portfolio sitting exactly on the threshold does not trigger: against a 60% target with a 5-point threshold, 65% and 55% both report Hold, and it takes 65.5% or 54.9% to flip the result.

The alternative is calendar rebalancing, which trades on a fixed schedule whether or not the portfolio has moved. The two are often combined: check on a schedule, but trade only where the drift has passed the threshold, which keeps the discipline of a regular review without trading on movements that do not warrant it. On tax, rebalancing inside a tax-advantaged account carries no tax on the trades, and directing new contributions toward the underweight side moves a taxable account back toward target without selling anything.

Quick example

With current stock allocation of 67% and target stock allocation of 60% (plus drift threshold of 5%), the result is REBALANCE NOW.

Which inputs matter most

The output is a comparison rather than a magnitude, so the gap between the two allocations drives it rather than either one on its own. Current and target enter only as their difference: moving both by the same amount leaves the result exactly where it was, and a 67/60 pair behaves identically to an 87/80 one. The threshold is the only input that can flip the answer without the portfolio having moved at all.

The comparison is strict, so drift has to exceed the threshold rather than reach it. That makes the boundary sharper than it looks: against a 60% target at a 5-point threshold, everything from 55% to 65% inclusive reports Hold, and the result flips only past those points.

The three fields step differently, which affects how finely the answer can be explored. Current allocation steps in single points and the threshold in single points, but the target steps in fives, so the target slider moves the drift in five-point jumps while the other two move it one at a time.

What's happening under the hood

The calculation takes the absolute difference between the current and target stock weights and compares it against the threshold, reporting REBALANCE NOW where the drift is strictly greater and Hold otherwise. The rows alongside give the drift itself, the direction it has moved in, and whether the position sits inside or outside the band.