Rebalancing

You pick a mix for your portfolio, for example 60% world stocks, 20% bonds, 10% emerging markets and 10% gold. That mix is a decision about how much risk you want to take. Then markets move, and the mix moves with them. After a few good years for stocks, the 60% can become 70%, and you are carrying more risk than you signed up for.

Rebalancing brings every holding back to its target weight. That keeps your risk where you chose it. You end up buying what has fallen behind and trimming what has run ahead, and you never have to guess what the market does next.

When to rebalance

• Every time you add money

  This is the cheapest way to rebalance. Instead of splitting a contribution evenly, put it into whatever is underweight. Nothing is sold, so there are no extra fees and no taxes to pay.

• Once or twice a year

  Pick a fixed date and check how far each holding is from its target. A fixed schedule keeps emotions out of it.

• When a holding drifts too far

  A common rule is to act when a holding is more than about 5 percentage points away from its target. Small drifts are not worth the fees.

Rebalancing more often than that mostly costs fees and, if you sell, taxes. For most long-term investors, steering new money plus a yearly check is enough.

Buying only, or selling too

If you only buy, the contribution goes where the gaps are biggest. Your portfolio moves towards the target, but it may not get there if the drift is large compared with what you add.

If you also sell, overweight holdings are trimmed and the money goes into the underweight ones, so every holding lands on its target.

How to use the Rebalancer

1. Add your holdings.

   Search for each stock or ETF by name, symbol or ISIN. For anything that is not listed, such as cash, a savings account or crypto, type a name and use it as a custom holding.

2. Enter what each one is worth today and its target.

   Values can be in different currencies; the total is converted to the contribution currency. The targets must add up to 100%.

3. Enter your contribution.

   This is the new money you are adding. It can be 0 if you only want to move what you already have.

4. Choose the options.

   Allow selling lets the Rebalancer trim overweight holdings. Fractional shares lets it buy and sell parts of a share; turn it off if your broker only trades whole shares.

5. Place the orders.

   The Rebalancer shows your weights now and after, and a list of orders with the number of shares and the amount for each. Prices move during the day, so the amounts at your broker will be slightly different.