Asset Allocation Calculator
Determine your ideal investment mix based on age, risk tolerance, and goals. This asset allocation calculator provides personalized portfolio recommendations to help you balance risk and return.
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Your Profile
Years until you need this money
Example Allocations by Goal
Your Recommended Allocation
Asset Breakdown:
💡 Consider More Growth
With a 30-year time horizon, you may benefit from a higher stock allocation. Time in the market helps smooth out volatility and capture long-term equity returns.
✓ Next Steps
Use low-cost index funds or ETFs to implement this allocation. Consider:
- Total market index funds for stock exposure
- Bond index funds or target-date funds
- Annual rebalancing to maintain target allocation
- Tax-advantaged accounts (401k, IRA) first
Your Allocation
Risk Profile Comparison
Age-Based Allocation
Understanding Asset Allocation
What is Asset Allocation?
Asset allocation is dividing investments among different asset categories like stocks, bonds, and cash. It's the primary determinant of portfolio returns and volatility, more important than individual security selection for most investors.
The 60/40 Portfolio
The classic 60% stocks / 40% bonds split has been a standard balanced allocation for decades. It provides growth potential from stocks while bonds cushion downturns. Modern variations include 70/30 or 80/20 for longer time horizons.
Age-Based Rules
Traditional rules suggest holding your age in bonds (e.g., 40 years old = 40% bonds). Modern approaches use 110 or 120 minus your age for stock allocation, reflecting longer lifespans and historically low bond yields. Use this asset allocation calculator to explore options.
Risk vs. Return
Stocks historically return 10% annually but with high volatility (losses of 30-50% possible). Bonds return 4-6% with lower volatility. Your allocation determines where you fall on this spectrum. Higher returns require accepting higher short-term risk.
Diversification Benefits
Proper asset allocation provides diversification - not putting all eggs in one basket. When stocks decline, bonds often hold steady or rise. International stocks don't always move with US markets. This reduces overall portfolio volatility.
Maintaining Your Allocation
Your allocation will drift as markets move. Review annually and rebalance when assets deviate 5%+ from targets. Use new contributions to buy underweighted assets. As you age, gradually shift toward more conservative allocations.
Important: This asset allocation calculator provides educational examples only. Your ideal allocation depends on factors like existing assets, income stability, other financial goals, and personal risk tolerance. These recommendations are general guidelines, not personalized advice. Consider consulting a financial advisor for a comprehensive plan.
Disclaimer: This calculator is for educational and illustrative purposes only. Results are estimates and may not reflect actual outcomes. Investing Point does not guarantee the accuracy of these calculations and is not responsible for any decisions made based on this tool.
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