How to Rebalance a 60/40 Portfolio With Trade Republic or DEGIRO: A Practical European Guide

Rebalancing a 60/40 ETF portfolio is essential for European investors who want to manage risk and stick to their investment plan. This guide shows you exactly how to rebalance your portfolio using Trade Republic and DEGIRO, two of Europe’s most popular low-cost brokers. We’ll cover why rebalancing matters, provide step-by-step instructions with platform walkthroughs, and highlight what to watch out for along the way.

If you’re just starting out, you may also find our step-by-step ETF buying guide useful for building your first portfolio.

Step 1: Understand Why and When to Rebalance

What to do: Decide on your rebalancing frequency (e.g., once or twice a year), and note your target allocation (here, 60% stocks/40% bonds).

• Why it matters: Markets move, so your portfolio drifts from its target split. For example, after a year of strong equity returns, your "60/40" might become "67/33". This increases risk beyond your comfort level.
• What can go wrong: Rebalancing too often increases costs and taxes. Too rarely, and you take more risk than intended.

Step 2: Review Your Current Portfolio Allocation

What to do: Log in to your broker and write down the current values of each ETF (stocks and bonds) and any cash.

• Why it matters: You need accurate, up-to-date numbers to calculate how far you’ve drifted from your 60/40 target.
• What can go wrong: Using old or estimated values leads to incorrect trades and missed targets.

Example:

• Vanguard FTSE All-World UCITS ETF (VWCE): €7,800
• iShares Core Euro Government Bond UCITS ETF (EUNA): €5,200
• Total portfolio value: €13,000

Current allocation: Stocks = €7,800 / €13,000 = 60%. Bonds = €5,200 / €13,000 = 40%. (Already on target in this example.)

Step 3: Calculate How Much to Buy or Sell

What to do: Use this formula to find your target values:

• Target stocks = Total portfolio × 60% = €13,000 × 0.6 = €7,800
• Target bonds = Total portfolio × 40% = €13,000 × 0.4 = €5,200

If your current holdings differ, you’ll need to buy/sell to reach these targets.

• Why it matters: This ensures you’re not overexposed to riskier assets after market swings.
• What can go wrong: Forgetting to account for cash, pending dividends, or fees can throw off your calculation.

Example: After a rally, your stocks have grown to €8,500 and bonds are €4,500. Total = €13,000. To rebalance:

• Sell €700 stocks and buy €700 bonds, or add new money to bonds only.

Step 4: Place Rebalancing Trades on Trade Republic

What to do: Use the Trade Republic app or website to buy or sell ETFs according to your calculations.

• Why it matters: Trade Republic’s low fees (typically €1 per trade or free with savings plans) make rebalancing affordable.
• What can go wrong: Placing trades outside market hours may result in unexpected prices. Selling may trigger capital gains taxes.

Walkthrough:

1. Open the Trade Republic app and tap Portfolio.
2. Select the ETF you want to buy or sell (e.g., VWCE or EUNA).
3. Tap Buy or Sell.
4. Enter the EUR amount or number of shares (Trade Republic allows fractional ETF shares, so you can enter exact amounts like €700).
5. Review the order summary, check the estimated fees, and confirm your trade.
6. Repeat for the other ETF as needed.

You should now see your updated ETF balances in the Portfolio tab. The allocation should be much closer to your 60/40 target.

Step 5: Place Rebalancing Trades on DEGIRO

What to do: Use the DEGIRO web platform or app to execute your rebalancing trades.

• Why it matters: DEGIRO offers a wide range of ETFs and low commissions (often €2 per trade, some ETFs commission-free).
• What can go wrong: DEGIRO does not support fractional ETF shares, so you must round to whole shares. This can leave a small cash “drift.”

Walkthrough:

1. Log in to your DEGIRO account and click Portfolio.
2. Find the ETF you wish to buy or sell (search by ticker, e.g., VWCE or EUNA).
3. Click Buy or Sell.
4. Enter the number of whole shares (e.g., 2 shares of VWCE at €105 each = €210).
5. Review the order, check the fees, and place your trade.
6. Repeat for your other ETF as needed.

After your orders are executed, your portfolio allocation will update in the Portfolio section. You may have a small leftover cash balance due to rounding.

Step 6: Record and Review Your Trades

What to do: After rebalancing, update your own records. Note trade dates, amounts, and any fees or taxes paid.

• Why it matters: Good records help with tax reporting and tracking your long-term performance.
• What can go wrong: Forgetting to track trades can cause confusion at tax time or when troubleshooting your portfolio history.

Both Trade Republic and DEGIRO provide downloadable statements. On Trade Republic, tap Documents in the app; on DEGIRO, go to Documents in your account menu.

Common Mistakes When Rebalancing With Trade Republic or DEGIRO

• Ignoring commissions: Small, frequent trades can add up. Minimise trading to save on fees.
• Tax surprises: Selling ETFs may trigger capital gains tax, depending on your country. Check your local tax rules before selling.
• Rounding errors on DEGIRO: Since you can’t buy fractions, your actual allocation may not match your target exactly. Accept a small drift or use cash to rebalance next time.
• Not rebalancing at all: Letting your portfolio drift for years can lead to more risk than you intended.

Next Steps

• Set a calendar reminder for your next rebalance (e.g., every 12 months).
• Consider automating your contributions via savings plans to reduce the need for manual rebalancing.
• Review our detailed rebalancing guide or our broker comparison for more ways to optimise your portfolio.

Disclaimer: This article is for educational purposes only and does not constitute financial advice. Always do your own research and consider consulting a qualified financial advisor before making investment decisions.