Rebalancing Impact — User Guide

The Rebalancing Impact page takes the same inputs as the main simulator — starting amount, monthly contribution, date range, stock/bond split, fund selections, and account type — but instead of comparing different strategies, it runs a single strategy at three rebalancing frequencies simultaneously.

Three parallel API calls fetch results for never-rebalance, quarterly, and annually. The chart overlays all three growth paths so you can see exactly where — and by how much — rebalancing frequency made a difference for the selected strategy.

Because the only variable changing is rebalancing frequency, any gap between the three lines is attributable entirely to the timing and frequency of portfolio rebalancing.

The strategy selector in the sidebar presents the same four core strategies available in the main simulator. Picking one determines which funds are used and whether an advisor AUM fee is applied. The chart then compares three rebalancing frequencies for that one strategy.

Switching strategies is instant — the page caches all four strategies from the API response, so changing the selector re-renders immediately without a new data fetch.

Rebalancing means selling some holdings that have grown beyond their target weight and buying those that have fallen below it, restoring the portfolio to its original stock/bond split. The simulator models three approaches:

The sidebar controls are identical to the main simulator, with one addition: the strategy selector. For full descriptions of each control, see the Strategies User Guide. Here's a summary of what each group contains:

Simulation Parameters

Portfolio & Costs

Display Options

The chart shows portfolio growth over time with up to five lines. Three rebalancing lines are always available; the Total Invested and Momentum lines are optional.

Line styles

Crash annotations

Vertical dashed lines mark three major market events — the Dot-com peak (March 2001), the 2008 Financial Crisis (September 2008), and the COVID-19 crash (February 2020). They appear only if your date range includes them.

Yield curve inversions

Red-tinted bands mark periods when the 10-year Treasury yield fell below the 2-year yield. These inversions have historically preceded recessions and provide context for drawdowns visible in the chart.

Interactive features

Hover anywhere on the chart to see a tooltip with all visible scenario values for that month. Click legend entries or use the stat-card checkboxes to toggle individual lines on and off.

Below the chart, three stat cards show side-by-side results for each rebalancing frequency. Each card has a checkbox that toggles its chart line, and a colored swatch matching the line style on the chart.

When you select a With Advisor strategy (Low-Cost Index or Actively Managed), a "Show momentum rotation" checkbox appears in Display Options. Checking it adds a purple dashed line to the chart and a separate Momentum stat card below.

The momentum strategy rotates annually among a universe of equity and bond funds based on trailing 12-month performance — the best-performing fund gets the largest weight, the worst gets the smallest. An optional yield-curve tactical overlay can shift allocation toward bonds during inversions.

Momentum always uses annual rotation regardless of the three rebalancing frequencies being compared, so the momentum line is independent of the rebalancing frequency selector. It provides a reference point: you can see whether the best rebalancing frequency for a buy-and-hold strategy beats or trails a momentum approach.

Aggressiveness levels

Below the stat cards, a plain-English callout summarizes the rebalancing comparison. It tells you:

• Best and worst frequency Which rebalancing approach produced the highest and lowest final value, and the dollar spread between them.
• Annual vs. quarterly Whether annual or quarterly rebalancing came out ahead, and by how much — since these are the two most common real-world options.

The callout updates automatically when you change strategy, date range, or any other input.

• Does rebalancing matter more for aggressive allocations? Move the stock/bond slider to 100% stocks, then to 60/40. The spread between the three rebalancing lines often widens at higher equity allocations because there's more drift to correct.
• Bull market vs. full cycle Set the date range to cover only a bull run (e.g. 2012–2019), then expand it to include the COVID crash. In sustained rallies, no-rebalancing often wins because it lets equities compound. Over full cycles, rebalancing can add value by systematically taking profits.
• Does the strategy change the answer? Click through all four strategies. Some fund families respond differently to rebalancing — particularly active funds whose equity and bond components may have different return patterns than their index counterparts.
• Tax cost of rebalancing In Taxable mode, compare the Taxes Paid rows. More frequent rebalancing realizes more capital gains, which costs money in a taxable account. Is the pre-tax rebalancing benefit large enough to survive the tax drag? See Tax & rebalancing for details.
• Rebalancing vs. momentum For With Advisor strategies, enable momentum. Does the best rebalancing frequency beat the momentum approach? If so, a simpler strategy may be preferable.
• Cross-check with the main simulator Once you've found an interesting rebalancing frequency, switch to the Comparing Strategies page and set the rebalancing control to that frequency. Now you can see how your preferred frequency performs across all six strategies.

In a taxable account, rebalancing triggers capital gains. The simulator models this with a 20% long-term capital gains rate. The tax treatment differs by strategy type:

No Advisor strategies

Without an advisor, the simulator assumes you hold all positions until the end of the simulation. Rebalancing still occurs at the chosen frequency, but capital gains tax is deferred to final liquidation. The "Est. Tax at Sale" row shows the full tax bill.

With Advisor strategies

With an advisor, capital gains are recognized at each rebalancing event. Quarterly rebalancing recognizes gains four times per year; annual rebalancing once per year. The "Taxes Paid" row accumulates the total tax paid over the simulation, while "Est. Tax at Sale" covers the remaining unrealized gains.

For a fuller discussion of the tax model and its limitations, see the Strategies User Guide.

The Rebalancing Impact page uses the same data and simulation engine as the Comparing Strategies page. Monthly adjusted-close prices come from Yahoo Finance, CPI and yield curve data from the FRED API.

For complete details on data sourcing, fund selection rationale, and simulation limitations, see the Data sources and Fund universe sections of the Strategies User Guide.