Cash Flow Portfolio Rebalancing Calculator
Use this calculator when you want to rebalance with new money first. It shows the minimum contribution needed for an exact no-sell rebalance, or how to allocate the contribution you actually have.
Minimum contribution for a no-sell rebalance$16,666.67
- Current portfolio value
- $100,000.00
- Contribution shortfall
- $6,666.67
- Recommended purchases
- Stocks $0.00; Bonds $10,000.00; Cash $0.00
- Post-contribution allocation
- Stocks 63.64%; Bonds 27.27%; Cash 9.09%
- Largest remaining drift
- 3.64%
- Within tolerance
- Yes
- Exact buy-and-sell alternative
- Stocks sell $4,000.00; Bonds buy $13,000.00; Cash buy $1,000.00
Asset breakdown
| Asset | Current value | Target | Recommended purchase | Post allocation | Drift | Exact trade |
|---|---|---|---|---|---|---|
| Stocks | $70,000.00 | 60% | $0.00 | 63.64% | 3.64% | -$4,000.00 |
| Bonds | $20,000.00 | 30% | $10,000.00 | 27.27% | -2.73% | $13,000.00 |
| Cash | $10,000.00 | 10% | $0.00 | 9.09% | -0.91% | $1,000.00 |
Recommended purchases use only the new money entered; negative trades appear only in the exact buy-and-sell alternative.
How to use this calculator
- Choose the three asset classes you want to compare.
- Enter each asset current value and target allocation.
- Enter the new contribution available to invest without selling.
- Set the tolerance band you use to decide whether remaining drift is acceptable.
- Review the recommended purchases and the exact buy-and-sell alternative.
How cash flow rebalancing is calculated
Cash flow rebalancing uses deposits to move an underweight portfolio closer to its target before considering sales. For each asset, the calculator compares the current holding with the target dollar value after adding the new contribution. If the available cash cannot get every asset exactly to target, it allocates the cash where it reduces the total dollar mismatch the most.
Let x_i be the current dollar value of asset i, t_i be that asset target weight as a decimal, V be the current portfolio value, and A be the contribution. The post-contribution portfolio value is W = V + A, and the exact target dollar value is z_i = t_i × W. The exact buy-or-sell trade is q_i = z_i − x_i, where a negative value is a sale.
The minimum contribution that permits an exact rebalance without selling is:
C_min = max(0, max(x_i ÷ t_i − V))
That maximum only applies to assets with a positive target. If an asset has a positive current value and a 0% target, no amount of new cash can make it exactly match target without selling that asset.
When the available contribution is smaller than the no-sell amount, the calculator starts with each desired purchase, d_i = t_i × W − x_i, then projects those desired purchases onto the set of valid purchases where every purchase is nonnegative and the purchases sum to A. In plain terms, it finds the nonnegative purchase list that is closest to the exact target trades. This is the same simplex projection used in constrained least-squares allocation problems.
What moves the recommendation
The biggest driver is the most overweight holding, because a contribution-only rebalance cannot reduce it directly. A large overweight stock position, for example, raises the no-sell contribution needed before bonds or cash can catch up. The target allocation also matters: a small target weight can require a large contribution if the current holding is already too large for that target.
The drift tolerance does not change the purchase recommendation. It only answers whether the resulting allocation is close enough to the target bands you entered.
What this calculator leaves out
The calculation ignores taxes, trading costs, bid-ask spreads, fund minimums, whole-share constraints, settlement timing, and account-location rules. It also does not judge whether the target allocation is suitable. Treat the result as portfolio arithmetic, then check it against your investment policy, tax situation, and actual order requirements.
Worked example
Suppose the portfolio has $70,000 in stocks, $20,000 in bonds, and $10,000 in cash, with targets of 60%, 30%, and 10%. The current value is $100,000 and the available contribution is $10,000, so the post-contribution value is $110,000.
The exact target values would be $66,000 in stocks, $33,000 in bonds, and $11,000 in cash. That exact rebalance would sell $4,000 of stocks, buy $13,000 of bonds, and buy $1,000 of cash. To avoid selling, the stock position would need to become no more than 60% of the finished portfolio, which requires a minimum contribution of $16,666.67.
Because only $10,000 is available, the closest contribution-only purchase is $10,000 to bonds and $0 to the other assets. The post-contribution allocation is 63.64% stocks, 27.27% bonds, and 9.09% cash. The largest remaining drift is 3.64 percentage points, which is within a 5 percentage-point tolerance.
Common questions
How can I rebalance a portfolio without selling?
You can direct new contributions toward underweight assets until the overweight holdings fall back toward their targets as a share of the whole portfolio. If the overweight position is too large, a no-sell exact rebalance may require more cash than you have available.
How much new money is needed to reach my target allocation?
For each asset with a positive target, the calculator asks how large the finished portfolio must be before the current holding is no more than its target share. The largest of those required portfolio sizes determines the minimum contribution. If a held asset has a 0% target, there is no finite contribution that reaches the target without a sale.
Which underweight investment should receive my next contribution?
The recommended purchases go to the assets where new money most reduces the dollar distance from the target portfolio. Sometimes that means all new cash goes to one asset, especially when one holding is much more underweight than the others.
What is portfolio allocation drift?
Allocation drift is the difference between an asset actual portfolio weight and its target weight. A portfolio that ends at 63% stocks against a 60% stock target has a positive drift of 3 percentage points for stocks.
Should cash be entered as an asset or as a new contribution?
Enter cash as an asset if it is already part of the portfolio allocation you want to measure. Enter it as a new contribution if it is outside the portfolio and is about to be invested.
Does contribution-only rebalancing avoid capital-gains taxes?
It can reduce or delay the need to sell appreciated holdings, which may help avoid realizing gains. This calculator does not calculate taxes, tax lots, or account type rules, so confirm the trade plan with tax-aware records before acting.