How this calculation works
Rebalancing after a contribution differs from simply trading the current portfolio back to target percentages. The new cash changes the total value to which every target weight applies. This page calculates exact value purchases and sales for user-selected targets. It shows both sides of the trade plan and verifies that net purchases equal the external cash change.
Target value = (sum current values + external cash) × target weight; trade = target − currentA worked example
Current values six hundred and four hundred total one thousand. Adding one hundred makes the target portfolio eleven hundred. At fifty percent each, both targets are five hundred fifty. The first asset sells fifty and the second buys one hundred fifty. Net purchases are one hundred, exactly matching the cash contribution; applying targets to the old total would miss that cash allocation.
Good to know
No market prices, integer share rounding, transaction fees, tax lots or capital-gains taxes are included. Those constraints can prevent an actual order list from matching the exact value solution. Target weights remain user assumptions. The page does not optimize an allocation, forecast returns or recommend a trade; it reconciles the arithmetic of the stated scenario.
Reference: SEC Investor.gov — asset allocation and rebalancing (opens in a new tab) ↗
What this calculation answers
Rebalancing after a contribution differs from simply trading the current portfolio back to target percentages. The new cash changes the total value to which every target weight applies.
This page calculates exact value purchases and sales for user-selected targets. It shows both sides of the trade plan and verifies that net purchases equal the external cash change.
The Portfolio covariance risk and component contributions calculator evaluates a separate risk model. Target weights in this rebalance are entered choices, not an optimized allocation derived from that risk calculation.
Use the right input conventions
Enter every included asset’s current value and target percentage using one currency. Target weights must sum to one hundred percent. A negative cash entry represents a withdrawal rather than a short position.
The model is long only and the withdrawal cannot exceed the complete entered portfolio. Values and trades are fractional currency amounts, not rounded share orders or executable instructions.
Interpret the result
A positive signed trade is a purchase and a negative trade a sale. Total purchases minus total sales must equal the contribution, or the negative withdrawal amount. That conservation check catches inconsistent target arithmetic.
An asset with target weight zero is fully sold in this model. The tool does not infer whether a zero target is suitable or account for the consequences of selling it.
Work through the example
Current values six hundred and four hundred total one thousand. Adding one hundred makes the target portfolio eleven hundred. At fifty percent each, both targets are five hundred fifty.
The first asset sells fifty and the second buys one hundred fifty. Net purchases are one hundred, exactly matching the cash contribution; applying targets to the old total would miss that cash allocation.
Where the model stops
No market prices, integer share rounding, transaction fees, tax lots or capital-gains taxes are included. Those constraints can prevent an actual order list from matching the exact value solution.
Target weights remain user assumptions. The page does not optimize an allocation, forecast returns or recommend a trade; it reconciles the arithmetic of the stated scenario.
A few questions, answered
Why can there be sales even when new cash is added?
A sufficiently overweight asset can still exceed its target share of the enlarged portfolio.
What changes in the comparison?
Add more cash and inspect when the overweight asset can be left unsold.