What is portfolio rebalancing?

Portfolio rebalancing is the process of realigning your investment portfolio back to your target asset allocation. Over time, different assets grow at different rates, causing your portfolio to drift from its original targets. Rebalancing involves selling over-allocated assets and buying under-allocated ones to restore your intended balance.

How often should I rebalance my portfolio?

Most investors rebalance quarterly or annually, though some use a threshold-based approach — rebalancing whenever any asset drifts more than 5% from its target. The best approach depends on your strategy: calendar-based is simplest, threshold-based is more responsive, and dynamic rebalancing adapts your targets to market conditions.

Is JustRebalance free?

Yes! JustRebalance is completely free to use. Create an account, add your positions, set your target allocations, and calculate your rebalancing trades — all at no cost.

What are dynamic allocation scenarios?

Dynamic allocation scenarios let you define multiple target allocations (e.g., Defensive, Core, Aggressive) and switch between them based on your market outlook. Combined with fully custom asset classes — which you name, color-code, and organize yourself — this gives you total control over your portfolio structure.

What is the Invest Cash rebalancing mode?

Invest Cash is a buy-only rebalancing mode. Instead of selling overweight positions, it uses your available cash to purchase underweight positions proportionally. This is perfect when you receive new capital and want to deploy it without triggering sells on your winners.

Can I use JustRebalance with any portfolio?

JustRebalance works with any portfolio! You create your own custom asset classes — name them anything you want, assign colors, and organize them your way. Manage stocks, bonds, ETFs, commodities, crypto, and cash all in one place.

How to Rebalance Your Portfolio Without Selling: The Cash-Only Approach

Learn how to rebalance your investment portfolio by investing new cash into underweight positions — no selling required. Avoid capital gains, keep your winners, and stay on target.

February 16, 20267 min read

The Problem With Traditional Rebalancing

Standard portfolio rebalancing works by selling your overweight (winning) positions and buying underweight ones. It's effective — but it comes with costs:

Capital gains taxes — Selling winners in a taxable account triggers taxes on profits

Transaction fees — More trades mean more costs, especially for smaller portfolios

Emotional cost — It feels wrong to sell something that's performing well

Timing risk — You might sell right before a position continues to rally

For many investors, there's a better way: rebalancing with cash only.

What Is Cash-Only Rebalancing?

Instead of selling your winners, cash-only rebalancing uses available cash — from new deposits, salary contributions, dividends, or other income — to buy underweight positions. Your overweight positions stay exactly where they are.

Think of it as "buying the dip" on your underperforming asset classes, funded with new money rather than proceeds from sales.

When Does Cash-Only Rebalancing Work?

This approach is ideal when:

You have new cash to deploy — Monthly salary, bonus, dividend income, or any fresh capital

Your drift is moderate — If your portfolio is only slightly off-target, new cash can close the gap without selling

You want to avoid taxable events — In a regular brokerage account, every sell of a profitable position creates a tax bill

You're in accumulation phase — If you're regularly adding to your portfolio (not withdrawing), this approach fits naturally into your workflow

When Standard Rebalancing Is Better

Cash-only rebalancing has limitations:

Large drift — If your portfolio is significantly off-target, new cash alone may not be enough to close the gap

No new cash available — If you're not adding money, you need to sell to rebalance

Tax-advantaged accounts — In an IRA or 401(k), selling doesn't trigger taxes, so there's less reason to avoid it

Urgent risk reduction — Sometimes you need to reduce exposure immediately, and waiting for new cash isn't practical

The best investors use both approaches: cash-only rebalancing most of the time, with standard rebalancing when drift gets too large.

How Cash-Only Rebalancing Works (Step by Step)

Step 1: Check Your Current Allocation

Review each asset class's actual percentage vs. its target. Identify which positions are underweight.

Step 2: Determine Available Cash

How much new capital do you have to invest? This could be your monthly contribution, a one-time deposit, or accumulated dividends.

Step 3: Calculate Buy Orders

The key math: distribute your available cash proportionally across underweight positions. Positions that are most underweight should receive the largest allocation of new cash.

This is where it gets tricky to do manually, especially with multiple asset classes and positions. The proportional calculation needs to account for:

How far each position is from its target

The total gap across all underweight positions

How much cash is available relative to the total gap

Step 4: Execute Buy Orders

Place your buy orders. No sells needed.

Step 5: Review the Result

After buying, check your new allocation. You may not be perfectly on target (if your cash wasn't enough to close all the gaps), but you'll be closer than before.

An Example

Suppose your portfolio looks like this with $2,000 of new cash to invest:

Asset Class	Target	Actual	Gap
Equities	50%	55%	Overweight
Bonds	25%	18%	-7%
Commodities	15%	12%	-3%
Cash	10%	15%	Overweight

With cash-only rebalancing, you'd invest the $2,000 into Bonds and Commodities proportionally based on their gap (Bonds get ~70% of the cash, Commodities get ~30%), bringing them closer to target. Equities stay untouched.

Let JustRebalance Do the Math

JustRebalance has a built-in Invest Cash mode designed exactly for this strategy. Here's how it works:

1. Your cash balance is tracked automatically within your portfolio

2. Switch to Invest Cash mode on the Rebalance page

3. Enter the amount you want to invest (or click "Use Max Available" to deploy all your cash)

4. Click "Generate Buy List" — the engine calculates the optimal buy orders to close allocation gaps without any sell orders

5. Execute with one click — all positions and cash balances update automatically

The algorithm distributes your cash proportionally across underweight positions, respecting whole-share constraints for stocks and fractional shares for crypto. It even handles the case where your cash isn't enough to fully close all gaps — it fills proportionally.

Combined with fully custom asset classes (define your own categories, colors, and organization), JustRebalance gives you complete control over how your portfolio is structured and rebalanced.

Try JustRebalance's Invest Cash mode for free →