At the year end the market climate changed, and so did your portfolio: it appreciated in value and became worth $110,000. Among the three categories of securities you had, bonds became worth $57,500 and local stocks $36,000, and the prices of international stocks dropped.
This means that you need to distribute investments back to the initial ratio in the portfolio by selling, as follows:
Some bonds = $57,500 – $55,000 = $2,500, so their share becomes 50% again;
some local stocks = $36,000 – $33,000 = $3,000, so their share goes back to 30%; and you buy 5% more international shares with the money you made selling bonds and local stocks. In this case, the slice of international stocks returns to 20%. For example, $110 is the price of the international share you want to buy to make up for your drift in this category. The 5% shortage can be calculated as $5,500, which means that you’d need $5,500 / $110 per share =
50 additional shares
to purchase.
By doing so, you keep your portfolio volatility consistent with the original intent and restore the portfolio balance.