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Portfolio Rebalancing

In short

Adjusting holdings back to target allocation — keeps risk profile consistent

If your target is 60% stocks / 40% bonds but stocks rally and become 75%, rebalancing sells some stocks and buys bonds to restore the 60/40 split. It's automatic discipline — sell high, buy low.

Portfolio rebalancing restores target allocations that drift due to different asset returns. The platform's rebalancing engine calculates required trades to minimize drift. Threshold-based rebalancing triggers when any allocation drifts beyond a set percentage.

Formula

Trade Size = Current Value - (Target Weight × Total Portfolio Value)

Related concepts

  • Asset Allocation — Asset allocation is how you divide your money between different types of investments. A classic '60/40' portfolio is 60% stocks, 40% bonds. It's the most important decision in investing — determines most of your long-term returns and risk.
  • Strategy Alignment — When you pick an investment strategy (like value investing or momentum), the platform scores each stock on how well it fits that strategy. High alignment score = great match. Low score = doesn't fit your style.
  • Broker Integration — Broker integration connects your brokerage account to Strategy Investor, so you can track your positions here and, where your connection supports it, place orders.
  • Tax-Loss Harvesting — If you're up $10,000 on Apple but down $3,000 on another stock, you can sell the loser to offset $3,000 of your Apple gains. You only pay tax on $7,000 instead of $10,000. The IRS lets you use losses to cancel gains.