Asset Allocation Calculator
Determine the optimal mix of stocks, bonds, and cash based on your age, risk tolerance, and financial goals. This calculator helps you create a diversified investment portfolio that matches your personal situation.
Asset Allocation by Investment Category
| Asset Class | Allocation % | Amount |
|---|---|---|
| Domestic Stocks | 0% | $0 |
| International Stocks | 0% | $0 |
| Bonds | 0% | $0 |
| Cash | 0% | $0 |
| Alternative Investments | 0% | $0 |
Suggested Portfolio Strategy
Based on your inputs, we recommend a balanced portfolio with a mix of growth and income investments.
About Asset Allocation
Asset allocation is an investment strategy that aims to balance risk and reward by dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash. The process depends largely on your individual goals, risk tolerance, and investment horizon.
Why Asset Allocation Matters
Proper asset allocation is crucial because it has a major impact on both your portfolio's risk and its potential return. Studies have shown that asset allocation is one of the most important factors in determining your overall investment returns, often more significant than individual investment selection.
How the Calculator Works
This calculator considers several factors to determine your optimal asset allocation:
- Age: Younger investors can typically take more risk as they have more time to recover from market downturns.
- Risk Tolerance: Your personal comfort level with investment risk and volatility.
- Economic Outlook: Your expectations for future economic conditions.
- Income Needs: How much income you need to generate from your investments.
- Tax Situation: Your marginal tax rate affects the after-tax return of different investments.
Rebalancing Your Portfolio
Once you've established your target asset allocation, it's important to periodically rebalance your portfolio to maintain those targets. Market movements will cause your actual allocation to drift from your targets over time. Rebalancing typically involves selling some investments that have grown beyond their targets and buying more of those that have fallen below.