Asset allocation calculator
How you split your money between stocks, bonds and cash decides most of your long-run growth and how much your portfolio can fall in a bad year. Enter your age, when you will need the money, your appetite for risk and what you hold today, and this calculator suggests a target mix and the trades that would get you there. It also estimates the expected return and a rough worst year for both mixes, and shows how the target shifts as you get older.
Trades to rebalance
What to buy or sell in each asset type to move from your current mix to the target. Doing it inside tax-advantaged accounts avoids tax on the sales.
| Asset | Now | Share now | Target share | Target amount | Trade |
|---|
How the target shifts over time
Stocks as a share of the portfolio at later ages, with your risk tolerance and your horizon counting down.
How the target mix is set
The calculator starts from a common rule of thumb and adjusts it for your risk tolerance and time horizon. Expected returns and the worst year use simple long-run assumptions.
Starting point
The 110 minus age rule.
stocks = 110 − age
Risk tolerance
Cautious takes 15 points off stocks, growth adds 10.
stocks ± risk adjustment, kept between 10% and 95%
Time horizon
Within 10 years, stocks are capped at 10 points per year left, 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. Bonds make up 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 questions
What is asset allocation?
It is how your investments are split between types of assets, mainly stocks, bonds and cash. The split matters more to your long-run results and to how bumpy the ride is than which individual funds you pick. More stocks means more growth and bigger swings; more bonds and cash means steadier values and lower growth.
What is the 110 minus your age rule?
A simple starting point: subtract your age from 110 to get the share of your portfolio in stocks. A 35-year-old would hold about 75 percent stocks. This calculator starts from that rule, then adjusts it for your risk tolerance and how soon you need the money.
How often should I rebalance?
Once a year, or when any part drifts more than about 5 percentage points from its target, is a common approach. Rebalancing means selling some of what has grown and buying what has lagged, which keeps your risk where you chose it.
Why does time horizon matter?
Money you need within a few years should not depend on the stock market, because a fall just before you need it may not recover in time. The calculator reduces stocks when your horizon is short, regardless of age.
How are the expected return and worst year worked out?
From long-run assumptions for each asset type: stocks around 8 percent a year with large swings, bonds around 4 percent with smaller ones and cash around 3 percent. The worst year is a rough bad-but-plausible year, about two standard deviations below average. They are estimates, not forecasts.
Is this personal financial advice?
No. It is a planning tool built on common rules of thumb. Your situation, taxes and other assets matter, so treat the result as a starting point for your own research or a conversation with an adviser.