Asset allocation calculator
The way your money is divided between stocks, bonds and cash drives most of its long-term growth and decides how far it can drop in a bad year. Enter your age, when you will need the money, how much risk you can stomach and what you own now, and the calculator proposes a target mix with the trades to reach it. It also estimates the expected return and a rough worst year for your current and target mixes, and shows how the target changes as you age.
Trades to rebalance
The buys and sells in each asset type that take you from your current mix to the target. Doing it inside tax-advantaged accounts means no tax on the sales.
| Asset | Now | Share now | Target share | Target amount | Trade |
|---|
How the target changes with age
The stock share of the portfolio at later ages, using your risk tolerance with your time horizon shrinking.
How the target mix is chosen
The calculator begins with a well-known rule of thumb, then adjusts for your risk tolerance and time horizon. Expected return and worst year use simple long-term assumptions.
Starting point
The 110 minus your age rule.
stocks = 110 − age
Risk tolerance
Cautious removes 15 points from stocks; growth adds 10.
stocks ± risk adjustment, kept between 10% and 95%
Time horizon
Within 10 years, stocks are limited to 10 points per remaining year, plus 10.
stocks ≤ 10 + 10 × years left
Cash and bonds
Cash is 5%, or 10% to 20% when the money is needed within 3 years, and bonds take the rest.
bonds = 100% − stocks − cash
Return and worst year
Stocks 8% ± 16%, bonds 4% ± 6%, cash 3% ± 1%, with a modest link between stocks and bonds.
worst year ≈ expected return − 2 × volatility
Asset allocation FAQ
What does asset allocation mean?
How your investments are divided between kinds of assets, mainly stocks, bonds and cash. That split matters more to long-term results and to how rough the ride is than the individual funds you choose. More stocks means more growth and bigger swings; more bonds and cash means steadier values and slower growth.
What is the 110 minus age rule?
A simple starting point: take your age from 110 to get your stock percentage, so a 35-year-old would hold about 75 percent in stocks. This calculator starts there and then adjusts for risk tolerance and how soon you need the money.
How often should a portfolio be rebalanced?
Once a year, or whenever a part drifts more than about 5 percentage points from target, is a common approach. Rebalancing sells some of what has grown and buys what has lagged, which keeps your risk where you set it.
Why does the time horizon matter?
Money needed within a few years should not rely on the stock market, because a fall right before you need it may not recover in time. The calculator cuts stocks when the horizon is short, whatever your age.
Where do the expected return and worst year come from?
Long-term assumptions for each asset type: stocks around 8 percent a year with big swings, bonds around 4 percent with smaller ones, cash around 3 percent. The worst year is a rough bad-but-possible year, about two standard deviations below average. They are estimates, not forecasts.
Is this personal financial advice?
No. It is a planning tool based on common rules of thumb. Your circumstances, taxes and other assets all matter, so treat the result as a starting point for research or a talk with an adviser.