Reallocation Calculation

Smart Rebalancing – Our key strength is minimizing your investment costs

Saving you time, transaction and tax costs

Let’s take a look at how Smart Rebalancing works. In the following example, you make an additional investment of 1,000/month in a 9 stock portfolio.

Rebalance

Time Cost

When rebalancing your stock or ETF portfolios, do you still use Excel to calculate your buy and sell quantities?

ETFs are transacted as shares. To calculate buy/sell shares for rebalancing, it could take you from ten minutes up to an hour to calculate by hand.

With Smart Rebalancing it takes seconds to calcuate. Just one click. If your hourly rate is minimum wage, or $11/hr, it saves you $132/year.

Transaction Cost

If you calculate by hand or other rebalancing tools you may pay $62.55(9 transactions at $6.95/transaction) a month for rebalancing, costing you $750.60/year.

These transaction costs consume 6.25% of your total additional investment.

Smart Rebalancing works with a powerful transaction cost minimizing engine, which can minimize the number of orders from 9 down to 4. Seen in illustrated highlighted the example below. Instead of paying over $60/month, it pays 27.8/month. This results in a monthly savings of $34.75, and a yearly savings of $417, all thanks to Smart Rebalancing.

Hint:Only 4 orders for rebalancing for 9 objects portfolio

 

Short-term capital gains tax

If you sell shares that you’ve owned for a year or less, you may trigger short-term capital gain in a regular investment account. It is taxed as though it were ordinary income, with the rate being that of the tax bracket in which that income places you.

Smart Rebalancing can take care of this. It advises against selling shares owned for a year or less. If it must sell those shares for rebalancing, you will be notified for your confirmation.

Let’s calculate the tax cost you may save in the following example. Your tax rate is 10%, and total investment amount is $50,000. The rate of return on capital gain is 5%. Your capital gain will be 2,500 a year. If all   capital gain triggers is short-term capital gain,  . If all   capital gain triggers is long-term capital gain, the long-term capital tax rate will be 0% based on your 10% tax rate and you would pay no capital gains tax.

 

More than just savings, Smart Rebalacing also

  • Calculating the minimum required additional investment amount for rebalancing or constructing a portfolio.

If your assets are not enough for rebalancing, Smart Rebalancing can calculate the additional reinvestment amount for successfully rebalancing.

  • Recommend a simpler portfolio with fewer assets to construct a portfolio.

If your assets are too limited to achieve a well-diversified portfolio, it will recommend a simpler portfolio. One that can also fit your risk tolerance.

 

Smart Rebalancing – a feature we take pride in and the best choice for saving your investment costs.

*All the data calculated above is base on the assumptions and examples outline above and are only for your reference. Actual results will differ case by case.

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