Portfolio Rebalancing Calculator
Enter what you hold in equity, debt and gold, and the mix you want. You get exactly how much of each to buy and sell to get back to it, or how to fix it with new money alone, without selling anything.
By Hardik Vegad, founder of WealthGamma · Last updated
Move
₹2,00,000
Sell ₹2,00,000 of equity. Buy ₹2,00,000 of debt.
- Equity70% → 60%Sell ₹2,00,000
- Debt20% → 30%Buy ₹2,00,000
- Gold10% → 10%Hold
Or add ₹3,33,333 of new money and sell nothing.
What is portfolio rebalancing?
Rebalancing means bringing your portfolio back to the split you chose between equity, debt and gold. You sell a little of what has grown past its share and buy what has fallen behind.
Say you picked 60% equity, 30% debt and 10% gold. After a good run in the market, equity is 70% of your money. Nothing went wrong, but you now carry more risk than you signed up for. Rebalancing takes you back to 60.
How do you calculate what to buy and sell?
Multiply your total portfolio by each target share, then subtract what you hold today. A plus number is a buy. A minus number is a sell.
Total = Equity + Debt + Gold + New money
Buy or sell = Target % × Total − Value today
Drift = Share today − Target share, in points
Worked through for ₹14,00,000 of equity, ₹4,00,000 of debt and ₹2,00,000 of gold, with a 60/30/10 target:
- Total = ₹20,00,000, so today's mix is 70% / 20% / 10%
- Equity: 60% × ₹20,00,000 − ₹14,00,000 = sell ₹2,00,000
- Debt: 30% × ₹20,00,000 − ₹4,00,000 = buy ₹2,00,000
- Gold: 10% × ₹20,00,000 − ₹2,00,000 = ₹0, so hold
Equity is 10 points above its target here, well past the usual 5 point limit, so this portfolio is due.
When should you rebalance your portfolio?
Check once a year on a fixed date, and act only if an asset has moved 5 points or more from its target. That mixes the two usual methods:
| By the calendar | By drift | |
|---|---|---|
| When | A fixed date, once a year | When an asset is 5 points off target |
| Effort | One check a year | You have to keep watching |
| Weak spot | Trades even for a tiny drift | Can trigger often in a wild market |
| Good for | Most investors | Larger portfolios |
A tighter limit keeps you closer to your plan but means more trades and more tax. A wider one, like 10 points, means fewer trades and bigger swings in between. Set your own limit in the calculator.
How do you rebalance without selling?
Send new money to whatever is furthest below its target. Nothing is sold, so there is no tax and no exit load. For the example above, ₹3,33,333 of new money does the whole job: ₹3,00,000 into debt and ₹33,333 into gold.
For each asset: Value today ÷ Target share
New money needed = Highest of these − Total today
Here equity sets the bar: ₹14,00,000 ÷ 60% = ₹23,33,333. Take away the ₹20,00,000 you hold, and ₹3,33,333 is left to add.
You don't need it all at once. Point your monthly SIP at the lagging asset. The first ₹50,000 of a SIP would all go to debt (₹50,000), and about 7 months of it gets this portfolio back on target, if prices hold still. Pick "Only buy" in the calculator to see where each month's money should go. The SIP calculator shows what that SIP grows to.
What does rebalancing cost in tax?
Every sale you make to rebalance is taxed like any other sale. A switch from one fund to another counts as a sale and a fresh purchase, even inside the same fund house.
- Equity funds and shares, held over a year. Gains are taxed at 12.5%, after the first ₹1.25 lakh of such gains in a year.
- Equity funds and shares, held a year or less. Gains are taxed at 20%.
- Debt funds bought on or after 1 April 2023. Gains are added to your income and taxed at your slab rate, however long you held them.
- Gold funds, ETFs and SGBs. Gains are taxed, and the rules differ by product and by how long you held it. Check before you sell.
- Exit loads. Many equity funds charge a fee, often 1%, on units sold within a year.
Three ways to keep the bill small: use new money first, sell units you have held for over a year, and keep each year's equity gains within ₹1.25 lakh. The tax harvesting calculator shows how far that limit goes.
What asset allocation should I pick?
There is no single right mix. It depends on how far away your goals are and how big a fall you can sit through without selling. These are common starting points, not advice:
| Equity / Debt / Gold | Often suits |
|---|---|
| 70 / 20 / 10 | Goals 10 or more years away, steady income, calm through big falls |
| 60 / 30 / 10 | A middle path for long goals |
| 50 / 40 / 10 | Goals getting closer, or falls that cost you sleep |
The mix you can hold through a crash beats the mix that looks best on paper. Pick one, write it down, and change it only when your life changes, not when the market does.
Does rebalancing improve returns?
Not reliably. Its main job is to control risk, not to add return. Over long periods equity tends to grow faster than debt, so trimming it can even leave you with a little less.
What you get in exchange is a portfolio that behaves the way you planned. Left alone, a 60% equity portfolio can drift to 75% or 80% after a long rally, and then takes the next fall at full weight. Rebalancing also makes you sell what has run up and buy what has lagged, which is hard to do by feel.
What does a rebalancing calculator not account for?
It gives you the amounts for each asset. It leaves out:
- Tax and exit loads. The sale amount is before both. After tax, you have a little less to move.
- Which fund to sell. It works on equity, debt and gold as a whole, not on each fund inside them.
- Money you can't move. PPF, EPF and ELSS units inside their three-year lock-in count in your mix but can't be sold at will.
- Price moves while you trade. Fund sales take a day or more to reach your bank, and prices change in between.
Frequently asked questions
What is portfolio rebalancing?
Rebalancing means bringing your equity, debt and gold back to the split you chose. You sell a little of what has grown past its share and buy what has fallen behind.
How do I calculate how much to buy and sell?
For each asset: target % × total portfolio − current value. A plus number is a buy, a minus number is a sell. With ₹20L split 70/20/10 and a 60/30/10 target, you sell ₹2,00,000 of equity and buy ₹2,00,000 of debt.
How often should I rebalance my portfolio?
Check once a year on a fixed date, and act only if an asset is 5 points or more away from its target. More often than that mostly adds tax and effort.
Can I rebalance without selling anything?
Yes. Send new money to the asset that is furthest below its target. In the example above, ₹3,33,333 of new money put into debt and gold fixes the mix with no sale and no tax.
Is rebalancing taxed in India?
Every sale is taxed like any other sale. Equity fund gains are taxed at 12.5% above ₹1.25 lakh a year if held over a year, and 20% if held for less. A switch between two funds counts as a sale too.
Should I rebalance when the market is falling?
That's when it matters most. After a fall, equity is below its target, so rebalancing means buying equity at lower prices with money from debt or gold.
Does rebalancing give higher returns?
Not reliably. Its job is to keep your risk where you set it. Without it, a long rally leaves you holding far more equity than you planned, just before the next fall.