You chose a 60:40 mix of equity and debt. A few strong months later, equity is 70% of the portfolio. You have not changed your plan, but your investments have changed the amount of risk you carry. Getting back to the target is rebalancing. Selling is one way to do it. New contributions are another.
Our Portfolio Rebalancing Calculator needs just three numbers: current equity value, current debt value and your target equity percentage. It shows both routes without asking you to list every holding.
First decide whether the target still fits
Restoring an old target makes sense only if that target still suits the goal. A shorter time horizon, different family commitments or a change in your ability to bear losses may justify reviewing the mix itself. SEBI’s investor guidance connects allocation with goals, risk tolerance and time horizon, and includes rebalancing in an investment review.
If your circumstances have stayed the same, a recent market rally is not, by itself, a reason to raise your equity target. Write down the mix you mean to hold. Our asset-allocation guide explains how to think about that decision.
The transfer route: keep the portfolio the same size
Suppose equity is worth ₹7 lakh and debt ₹3 lakh. The total is ₹10 lakh, with 70% in equity. At a 60% equity target, the existing portfolio should contain ₹6 lakh of equity and ₹4 lakh of debt.
Moving ₹1 lakh from equity to debt gets you there. The total remains ₹10 lakh before any tax or transaction costs. This is the simple calculation most people have in mind when they think about rebalancing.
The contribution route: keep the equity holding
Now suppose you would prefer to keep all ₹7 lakh in equity. For that holding to become 60% of the portfolio, the total must be ₹7 lakh ÷ 0.60, or about ₹11.67 lakh. You therefore need to add about ₹1.67 lakh to debt, leaving equity unchanged.
| Route | Equity | Debt |
|---|---|---|
| Transfer ₹1 lakh from equity to debt | ₹6,00,000 | ₹4,00,000 |
| Add about ₹1.67 lakh to debt only | ₹7,00,000 | ₹4,66,667 |
Adding only ₹1 lakh would give you ₹7 lakh in equity and ₹4 lakh in debt. Equity would still be 63.64%, not 60%. The amount needed is larger because new money increases the denominator as well as the underweight holding.
The two calculator amounts are alternatives. They are not a checklist telling you to transfer ₹1 lakh and also add ₹1.67 lakh. You can combine smaller transfers and contributions, but then the amounts need to be worked out together.
What if equity is below target?
The same idea works in the other direction. With ₹4 lakh in equity and ₹6 lakh in debt, the equity share is 40%. A 60% target can be reached by transferring ₹2 lakh from debt to equity. If you leave debt unchanged and use new money only, you need ₹5 lakh of fresh equity investment. The resulting ₹9 lakh of equity and ₹6 lakh of debt make a 60:40 mix.
You can use the next few contributions
You do not have to supply the entire top-up on one day. In the first example, six contributions of ₹25,000 to debt and a final contribution of about ₹16,667 would provide the required ₹1.67 lakh—if the existing values did not change. In real life they will change, so check the mix again before the final contribution. Keep money needed for emergencies or near-term spending separate from this exercise.
The SEC’s investor education guide to rebalancing describes both selling overweight assets and directing purchases or ongoing contributions toward underweight assets. It also calls for considering fees and tax consequences before acting. This is a general portfolio principle, not a statement of Indian tax rules.
When contributions may not be enough
A small regular investment can repair a small drift in a growing portfolio. A large imbalance may require more fresh money than you can reasonably add soon. During that wait, the portfolio remains away from target. A transfer can restore the mix immediately, but may incur costs or require selling an asset that is locked, illiquid or unsuitable to sell at that moment.
Before deciding, examine the actual holdings you would use, any exit loads, tax on realised gains and access restrictions. Adding new money avoids a sale of existing holdings, but purchases may still have charges. The calculator does not deduct those costs or choose which security to sell. Our capital-gains guide is a useful starting point for that separate question.
A review rule makes this easier
Pick a review date or a drift threshold that fits your plan, rather than reacting to every market move. For example, checking annually and considering action at a five-percentage-point drift is a possible rule, not a universal requirement. A 60% target that moves to 65% has drifted five percentage points; that is different from saying it rose by 5%.
Use values from the same date, keep the portfolio boundaries consistent and use new contributions where they fit the plan. The aim is to restore the amount of risk you deliberately chose, not to forecast which asset will perform best next.
This article is for education, not personal investment advice. The examples assume unchanged market values and exclude taxes, charges and liquidity restrictions. The 60:40 mix is illustrative, not a recommendation. Rebalancing does not guarantee returns or prevent losses. For advice about your circumstances, consult a SEBI-registered investment adviser. Sources checked on 2 October 2026.