Before You Start
- Basic understanding of ETFs and your current portfolio allocation
- Access to your brokerage account (e.g., Trade Republic, DEGIRO)
- A list of your current ETF holdings, number of shares, and current market values
- Knowledge of your target allocation (e.g., 70% MSCI World, 30% MSCI Emerging Markets)
- Awareness of tax rules in your country (capital gains, transaction taxes)
- Pen and paper or a spreadsheet (Excel, Google Sheets, or a free online portfolio tracker)
Time needed: 60–90 minutes for a typical portfolio
What you'll need: Computer or smartphone, internet access, calculator or spreadsheet tool, access to your broker’s platform
Rebalancing is the process of restoring your ETF portfolio to its target allocation—crucial for managing risk and staying on track with your investment goals. But how do you actually rebalance as a European investor, using EUR and platforms like Trade Republic or DEGIRO, while minimising taxes and fees?
This tutorial delivers a tested, step-by-step method for rebalancing your European ETF portfolio in 2026. We’ll walk through both calendar and threshold strategies, show you exactly how to execute trades on leading brokers, and share practical tips to avoid common mistakes. For further context and advanced strategies, see our complete guide to mastering European ETF portfolio rebalancing.
Step 1: Clarify Your Target Allocation
What to do: Write down (or open your spreadsheet with) your target allocation—e.g., 70% in an MSCI World ETF (global developed markets), 30% in an MSCI Emerging Markets ETF.
- Example: For a €20,000 portfolio: €14,000 (70%) in
iShares Core MSCI World UCITS ETF (EUNL), €6,000 (30%) iniShares Core MSCI EM IMI UCITS ETF (EIMI).
Why it matters: Target allocations reflect your investment goals and risk tolerance. Rebalancing is about returning to these targets.
What can go wrong: If you don’t have a clear target, you might rebalance to an allocation that no longer fits your needs or risk profile.
Pro Tip
Review your target allocation annually or after major life events—don’t just copy a model portfolio without considering your own situation.
Step 2: Choose Your Rebalancing Strategy (Calendar vs. Threshold)
What to do: Decide whether you’ll rebalance on a fixed schedule (calendar) or when your allocation drifts past set limits (threshold).
- Calendar-based: Rebalance every 6 or 12 months, regardless of market moves.
- Threshold-based: Rebalance only if an asset class drifts more than X% from its target (e.g., 5% bands).
Why it matters: Calendar rebalancing is simple and predictable. Threshold rebalancing can reduce trading costs and taxes but requires more monitoring.
What can go wrong: Too frequent rebalancing leads to excessive fees and taxes. Too infrequent and your risk profile may drift substantially.
For evidence-based recommendations on frequency, see How Often Should You Rebalance a European ETF Portfolio?
Step 3: Gather Your Current Portfolio Data
What to do: Log in to your broker (e.g., Trade Republic or DEGIRO) and note down:
- The number of shares you hold in each ETF
- The current market price per ETF
- The total EUR value of each ETF holding
How to do it:
- Trade Republic: Tap Portfolio in the app. For each ETF, note the number of shares and current value.
- DEGIRO: In the web platform, go to Portfolio. Each ETF row displays quantity and total value in EUR.
Why it matters: Accurate data is critical for calculating current percentages and determining what needs adjusting.
What can go wrong: Using outdated prices or missing assets (e.g., forgetting about accumulating cash) will throw off your calculations.
Pro Tip
Export your holdings to a spreadsheet for easier calculations. Both Trade Republic and DEGIRO allow you to download account statements.
Step 4: Calculate Your Current Allocation Percentages
What to do: For each ETF, divide its current EUR value by your total portfolio value. Multiply by 100 to get the percentage.
- Example: EUNL: €13,000 / €20,000 = 0.65 (65%)
EIMI: €7,000 / €20,000 = 0.35 (35%)
Why it matters: This tells you how far you’ve drifted from your target allocation.
What can go wrong: Forgetting to include cash or other assets can misstate your true allocation.
Pro Tip
Include uninvested cash in your calculations—cash is part of your portfolio’s risk profile.
Step 5: Identify What Needs Adjusting
What to do: Compare your current percentages with your targets. Highlight any ETFs outside your chosen threshold (e.g., more than 5% away from target).
- Example: If your target for EUNL is 70%, but it’s at 65%, and EIMI is at 35% (target 30%), you need to sell some EIMI and buy EUNL to rebalance.
Why it matters: This step pinpoints which ETFs to buy or sell for rebalancing.
What can go wrong: Not checking against your threshold may lead to unnecessary trades, increasing costs and tax exposure.
Step 6: Decide Whether to Use New Contributions (If Available)
What to do: If you have new cash to invest, consider using it to buy underweight ETFs instead of selling overweight ones.
- Example: If you’re adding €2,000 and EUNL is underweight, buy EUNL with the new funds to bring your allocation closer to target.
Why it matters: Using new contributions avoids selling (and triggering taxes), minimising transaction fees and tax liability.
What can go wrong: If new contributions are too small relative to the drift, you may still need to sell some holdings for a full rebalance.
Pro Tip
Set up a regular savings plan for underweight ETFs—most European brokers (including Trade Republic and DEGIRO) allow automated monthly purchases.
Step 7: Calculate Exact Buy/Sell Amounts
What to do: Calculate how much (in EUR) you need to buy or sell of each ETF to reach your targets. Use a spreadsheet or an online rebalancing calculator.
- Example: For a €20,000 portfolio targeting 70% EUNL:
Target EUNL = €14,000
Current EUNL = €13,000
Buy €1,000 of EUNL - For EIMI (target €6,000, current €7,000): Sell €1,000 of EIMI
Why it matters: This ensures you make the minimum trades needed to restore balance.
What can go wrong: Rounding errors or not accounting for minimum trade sizes (e.g., whole ETF shares) can leave you off-target.
Pro Tip
Trade Republic allows fractional ETF purchases, so you can rebalance precisely. On DEGIRO, you must buy/sell whole shares—round to the nearest share and accept minor deviations.
Step 8: Check Tax and Fee Implications Before Trading
What to do: Review potential capital gains taxes and transaction fees for each trade. In some European countries, selling ETFs triggers taxes even if you immediately reinvest.
- Trade Republic: €1 commission per trade (as of 2026). No custody fees. Check your annual tax-free capital gains allowance.
- DEGIRO: €2 commission per ETF trade (core selection is free, but selection changes yearly; see official DEGIRO fees).
Why it matters: Taxes and fees can erode returns more than minor allocation drift.
What can go wrong: Ignoring tax implications can create unexpected bills. For in-depth guidance, see Tax Traps to Avoid When Rebalancing ETFs in Europe.
Pro Tip
If possible, use tax-advantaged accounts (e.g., French PEA, German Sparerpauschbetrag, or Spanish Plan de Pensiones) for ETF investing to reduce tax impact.
Step 9: Execute Rebalancing Trades on Your Broker
What to do: Place buy/sell orders for the calculated amounts on your chosen platform.
- Trade Republic:
- Open the app and tap Portfolio.
- Select the ETF to adjust.
- Tap Buy or Sell, enter the EUR amount (fractional shares allowed), and confirm the order.
- Repeat for each ETF as needed.
- DEGIRO:
- Log in to the web platform.
- Go to Portfolio, select the ETF, and click Buy or Sell.
- Enter the number of whole shares.
- Review fees and confirm the transaction.
Expected outcome: You should now see your ETF holdings updated, with values closely matching your target allocation.
What can go wrong: Market price changes between calculation and execution may require minor adjustments. Double-check orders before confirming.
Pro Tip
On Trade Republic, you can set up or adjust Savings Plans to automate future rebalancing. This reduces manual effort and trading costs—see Should European Investors Use Automation to Rebalance Their Portfolios in 2026? for more.
Step 10: Document and Review Your Rebalance
What to do: Update your spreadsheet or portfolio tracker with the new ETF quantities and values. Note the date and rationale for the rebalance.
Why it matters: Tracking your actions helps you learn from experience and provides a record for tax or audit purposes.
What can go wrong: Failing to document trades can make it hard to explain your strategy or calculate future taxes.
Pro Tip
Set a calendar reminder for your next review—whether you use a calendar or threshold approach, consistency is key to disciplined investing.
Common Mistakes When Rebalancing European ETF Portfolios
- Over-trading: Rebalancing too often increases costs and tax liability for little benefit. Stick to your chosen strategy.
- Ignoring tax impact: Selling ETFs can trigger capital gains tax. Check your country’s rules and consider using new cash instead.
- Forgetting about fees: Small, frequent trades can add up. Use platforms with low or zero commissions when possible.
- Neglecting cash: Not including cash in your allocation can distort your risk profile.
- Not updating your targets: Your life and market conditions change—review your target allocation at least annually.
Next Steps
- Explore automation options: Read Should European Investors Use Automation to Rebalance Their Portfolios in 2026?
- Compare broker tools: See Best European ETF Rebalancing Tools and Apps for 2026
- Deepen your ETF investing skills: Start with The Beginner’s Blueprint for ETF Investing in Europe
- Want the full context? Read our 2026 Guide to Mastering European ETF Portfolio Rebalancing
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.