Asset Allocation โ Stocks, Bonds & Cash
Get a recommended portfolio mix based on your age, risk tolerance, and time horizon.
Why This Matters for Your Finances
Why: Proper allocation balances growth potential with risk. Age and horizon matter.
How: Uses 100-minus-age rule adjusted by risk tolerance. Stocks for growth, bonds for stability.
- โ100โage rule for stocks
- โRebalance annually
- โ20-40% international
- โAdjust for risk tolerance
Sample Scenarios
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โ ๏ธFor educational purposes only โ not financial advice. Consult a qualified advisor before making decisions.
๐ก Money Facts
Classic stock rule
โ Guideline
Balanced portfolio
โ Typical
Aggressive young
โ High risk
Conservative retiree
โ Low risk
๐ Key Takeaways
- โข Stocks: Growth potential, higher volatility
- โข Bonds: Income and stability
- โข Cash: Emergency fund and short-term needs
- โข Rebalance annually to maintain target allocation
- โข Age and time horizon are key factors
๐ก Did You Know?
๐ How Asset Allocation Works
Asset allocation divides your portfolio among stocks, bonds, and cash. Stocks offer growth but volatility; bonds provide income and stability; cash ensures liquidity. The right mix depends on your age, risk tolerance, and time horizon.
๐ฏ Expert Tips
Match Allocation to Horizon
Longer horizons allow more stocks. Short-term goals need more bonds and cash.
Rebalance Annually
Reset to target allocation to control risk and capture rebalancing bonus.
Diversify Within Classes
Don't put all stocks in one sector. Spread across domestic, international, sectors.
Consider Target-Date Funds
One fund handles allocation and rebalancing automatically.
โ๏ธ Allocation by Age (Typical)
| Age | Stocks | Bonds | Cash |
|---|---|---|---|
| 25-35 | 80-90% | 10-15% | 5% |
| 35-50 | 60-75% | 20-30% | 5-10% |
| 50-65 | 40-60% | 35-50% | 5-10% |
| 65+ | 25-40% | 50-65% | 10-15% |
โ Frequently Asked Questions
What is the 100 minus age rule?
A simple guideline: stocks % = 100 โ your age. A 40-year-old would hold ~60% stocks. Many advisors now use 110 or 120 minus age.
How often should I rebalance?
Annually or when allocations drift more than 5% from target. Avoid over-rebalancing to limit taxes and fees.
Should I include real estate in allocation?
REITs can count as stocks. Physical real estate is often separate. Include if it's part of your investable assets.
What about international stocks?
Many recommend 20-40% of stocks in international. Diversifies currency and economic risk.
๐ Allocation by the Numbers
๐ Sources
โ ๏ธ Disclaimer: This calculator provides general guidance only. Consult a financial advisor for personalized recommendations. Past performance does not guarantee future results.