Portfolio Rebalancing Checklist

Portfolio Rebalancing Checklist

• Document your target allocation (e.g., 60% stocks, 40% bonds)

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  Write it down in an investment policy statement. Review annually.
• Calculate your current allocation across all accounts

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  Include 401(k), IRA, taxable brokerage. Sum by asset class.
• Identify which asset classes are overweight vs. underweight

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  If stocks grew to 68% and you target 60%, you're overweight stocks.
• Check if drift exceeds your threshold (e.g., 5% or more)

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  Small drifts can wait. Large drifts justify rebalancing.
• Rebalance in tax-advantaged accounts first (IRA, 401k)

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  No tax impact. Sell overweight assets, buy underweight.
• Use new contributions to buy underweight assets when possible

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  Avoids selling and triggering taxes in taxable accounts.
• If selling in taxable, consider tax-loss harvesting opportunities

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  Harvest losses to offset gains. Swap to a similar (not identical) fund.
• Avoid wash sales—don't buy same/similar fund 30 days before/after

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  IRS disallows losses if you repurchase substantially identical security.
• Record the rebalance date and new allocations for tracking

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  Helps you avoid over-trading. Calendar reminders for next review.
• Update your spreadsheet or tracking tool with post-rebalance balances

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  Clean records make future rebalancing easier.