The bond amount stayed the same; its share fell.
Bar lengths share one euro scale. Percentages use each row's total and are rounded.
Before the riseTotal €80,000
After the riseTotal €92,000
A holding’s weight uses today’s total. Here, bonds lose no money: growth elsewhere reduces their percentage. Allocation drift is movement away from target weights; a holding’s weight can also fall without a sale.
Calculate both examples using current totals
The first total rises from €48,000 + €32,000 = €80,000 to €60,000 + €32,000 = €92,000. Current weights are €60,000 ÷ €92,000 = 65.22% shares and €32,000 ÷ €92,000 = 34.78% bonds, rounded.
A separate rally illustration
A hypothetical €100,000 portfolio starts at 60% shares and 40% other assets. Shares rise 50%; other assets are unchanged. No cash flows, fees or taxes. The starting mix is illustrative, not a recommendation.
Shares become €60,000 × 1.50 = €90,000; adding €40,000 gives €130,000. The new share weight is €90,000 ÷ €130,000 = 69.2307…%, about 69.23%. No purchase was needed for the weight to rise.
Read a percentage change alongside its money amount and cause.
Which “five percent” does the rule mean?
Weight axis: 10–30% (a cropped view, not zero-based). Dashed line: target 20%. Diamond: current 24%.
Five percentage points either side
15–25% · 24% is inside this range.
5% of the target either side
19–21% · 24% is outside this range.
Percentage points measure a difference between weights; relative drift measures that difference against the target. Relative drift is undefined when the target is zero.
Percentage points, relative drift and zero targets
From 20% to 24% is four percentage points and 20% relative growth: 4 ÷ 20. In the first portfolio, 60% becomes about 65.22%: +5.22 percentage points, or +8.70% relative to target. Use unrounded weights for calculations; displayed values are rounded.
For a zero target, choose an amount or percentage-point limit rather than division by that target.
A band accepts variation; it predicts no price.
The chosen width trades temporarily accepted exposure against attention and transaction burden; age or a return history alone does not derive it.
Specify whether touching a limit counts, when values are checked and what review or adjustment follows. No example establishes a suitable tolerance for everyone, and one allowance can permit very different risks at different targets.
Boundary cases and small targets
An illustrative 55–65% band around 60% includes 61% and excludes 66%. A rule must specify how reaching the boundary is treated.
Four percentage points moves 2% to 6%, tripling the target; 60% to 64% has a much smaller relative effect. Uniform allowances can hide this difference.
Vanguard’s threshold examples combine limits with scheduled checks. Define the measurement and response without turning every price move into a task.
Define this goal’s portfolio before measuring it.
Use one currency, consistent valuation dates and every included account. Missing balances or stale exchange rates can imitate changed exposure.
Include waiting investment cash and retained distributions. An internal transfer changes no combined capital; spending removes it. Emergency reserves serving another purpose are outside rebalancing money.
Nested targets and mixed funds
A distribution held as cash remains inside the portfolio; paying it out removes it. New cash enlarges the total before any purchase.
Half of a 60% share allocation is 30% of the whole, before other exposure to that region. Label both levels. Look through a mixed fund: its internal mix can change while its account weight stays constant. A neat list of fund weights does not establish diversification.
Measure first; a breach is not automatically a trade.
Correct balances and valuations before applying the rule. Small accepted drift may need no transaction. Then check whether the target still fits: being on target cannot secure a newly unsuitable goal, and being off target predicts no next price.