Portfolio Rebalancing Simulator

Portfolio rebalancing refers to the realignment of the asset allocation of a portfolio (% in stock/equity, % in bonds/debt) back to the original asset allocation planned for the investment. This is done to control risk and  increase the potential for returns.

You can read more about this here:

http://invest-it-yourself.com/rebalancing.php

I have developed a portfolio simulator to help in understanding how rebalancing can make a difference. There is no guarantee that it will result in better returns. However it does make a difference most of the time. You can use this calculator to find how when it is likely to make a difference.

The calculator contains the following sheets:

1. Notes about the calculation procedure.

2. Rebalancing illustration

3. Rebalancing SIP investments

4. Rebalancing lumpsum investments

5. Rebalancing a retirement portfolio to find out how long a corpus will last

6. Sample data and analysis

The calculator uses historical sensex returns for equity instruments and historical FD returns for debt instruments. You are free to change this to anything else you like.

Give this try and learn more about the benefits of rebalancing.

Download the Portfolio Rebalancing Simulator

 

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6 thoughts on “Portfolio Rebalancing Simulator

  1. Dear sir,
    Is it necessary to build the portfolio with only Bond funds [ i mean the debt part of the portfolio] ?
    I am stuck in deciding as to which debt fund to consider for setting up a portfolio.
    Appreciate your guidance in this regard.

  2. Hi Pattu,
    Is there any calculator for rebalancing wherein the asset allocation will depend on how far or closer we are to the goal? All the rebalancing calculators I found have a constant asset allocation for the entire period of accumulation.
    For goals like retirement, which can be say 30 years away, the asset allocation will be higher on equity side..say 80:20 in the initial years and will change gradually to 10:90 when there are 2-3 years or less left for the goal.
    I could not find a calculator for this scenario… so demanding that from you 🙂

    Thanks!

  3. Pattu Sir,

    Have you designed that reducing equity exposure rebalancing tool as requested by Lalit above? today I read your new article “How to reduce risk in an investment portfolio” where you have given great importance to a reducing equity exposure. Would be great to know by what age we should have how much % in equity and how it will work with the simulator. Many thanks for your guidance.

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