Asset Allocation Calculator
Asset allocation — how you split your portfolio among stocks, bonds, and cash — is the single biggest driver of long-term investment returns and risk. More than individual stock picks or market timing, getting the allocation right for your age and risk tolerance determines outcomes.
Enter your age, portfolio value, risk tolerance, and timeline to get a recommended allocation with dollar amounts and a 10-year projected value range.
How to Choose Your Asset Allocation
Asset allocation is the strategic decision — not stock picking, not fund selection, not market timing — that determines 90%+ of your portfolio's long-term returns and volatility according to landmark research by Brinson, Hood, and Beebower. Get this right first, then optimize within each asset class.
Two factors drive your allocation: time horizon and risk tolerance. Time horizon is objective — how many years until you need the money. Risk tolerance is partly behavioral — how you'd actually respond to seeing your portfolio drop 30% in a single year. Many investors overestimate their risk tolerance during bull markets and discover the truth during a crash. An allocation you'll abandon at the worst moment is worse than a more conservative allocation you'll hold through volatility.
Age-Based Rules of Thumb
The classic rule: stock allocation = 110 minus your age. A 30-year-old holds 80% stocks; a 60-year-old holds 50% stocks. More aggressive investors use 120 minus age. These are starting points, not prescriptions — adjust based on your actual risk tolerance and when you'll need the money. Target-date funds (e.g., Vanguard Target Retirement 2045) automate this age-based glide path.
| Age | Conservative | Moderate | Aggressive |
|---|---|---|---|
| 25–35 | 60/30/10 | 80/15/5 | 95/5/0 |
| 36–45 | 50/35/15 | 70/25/5 | 85/10/5 |
| 46–55 | 40/40/20 | 60/35/5 | 75/20/5 |
| 56–65 | 30/50/20 | 50/40/10 | 65/30/5 |
| 65+ | 20/55/25 | 40/45/15 | 50/40/10 |
What Goes in Each Asset Class
Stocks (equities): For most investors, a simple mix of a total US stock market index fund (e.g., VTI) and a total international stock fund (e.g., VXUS) provides instant diversification across thousands of companies. The US/international split is typically 60/40 to 70/30. Bonds: Total bond market index funds (e.g., BND) provide a mix of government and corporate bonds. Short-term bond funds have less interest rate risk. Cash: High-yield savings accounts, money market funds, or short-term CDs serve the cash allocation. The goal is capital preservation and liquidity, not growth.
Rebalancing: Keeping Your Allocation on Track
Over time, market returns pull your portfolio away from its target. If stocks outperform, you may drift from 70% stocks to 80% — more risk than intended. Rebalancing sells the over-performers and buys the under-performers to restore your target. The Portfolio Rebalancing Calculator shows exactly how many shares to buy or sell for each asset class to restore your target mix. Most investors should rebalance once per year or when any asset class drifts more than 5 percentage points from its target.
To understand how bonds should factor into your allocation, read our guide on bonds vs. stocks. To see how investment returns compound over time at different allocation returns, use the Compound Interest Calculator.
Frequently Asked Questions
What is asset allocation?
Asset allocation is how you divide your portfolio among stocks (equities), bonds (fixed income), and cash. Each asset class has different risk and return characteristics. Stocks grow more over time but swing wildly in the short term. Bonds provide income and stability but less growth. Cash preserves capital but loses to inflation. Your allocation should match your timeline and risk tolerance.
What is the 60/40 portfolio rule?
The 60/40 portfolio — 60% stocks, 40% bonds — is the classic moderate allocation benchmark. It historically produced 7%–8% annual returns with meaningfully lower volatility than 100% stocks. After a period of underperformance in 2022 (when both stocks and bonds fell), many advisors now debate whether 70/30 or 65/35 is more appropriate given lower long-term bond return expectations.
How often should I rebalance my portfolio?
Rebalance once per year or whenever any asset class drifts more than 5 percentage points from its target. Rebalancing more frequently creates unnecessary transaction costs and potential tax events. A simple approach: rebalance at the same time each year (many people use January or their tax filing deadline as a trigger) and also check after major market moves (20%+ up or down).
Should I use index funds or actively managed funds?
Research consistently shows that low-cost index funds outperform most actively managed funds over 10+ year periods, primarily because they have lower expense ratios (0.03%–0.20% vs. 0.5%–1.5% for active funds) and avoid the transaction costs of frequent trading. For most investors, a three-fund portfolio (total US stock index, total international stock index, total bond index) provides all the diversification needed at the lowest possible cost.
What allocation should a 30-year-old have?
Most guidelines suggest 80%–90% stocks for a 30-year-old with a long investment horizon. The traditional "110 minus age" rule gives 80% stocks at age 30. Aggressive investors use "120 minus age" for 90% stocks. If you have a conservative risk tolerance and would panic-sell in a downturn, 60%–70% stocks is more realistic. The best allocation is one you'll hold through market volatility.
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