Asset Allocation Calculator
See an example stock, bond and cash mix for a risk profile and horizon, then check its expected return and risk.
Quick answer
Asset allocation is the split of a portfolio across stocks, bonds and cash. Here an example mix starts from a base stock share for the risk profile, lowered for short horizons and raised slightly for very long ones.
Asset Allocation Calculator
Your allocation (edit to override)
Return, risk & correlation assumptions
Illustration only. The example mix is a simple rule of thumb, not investment advice, and takes no account of your personal situation.
Example Mix (stocks / bonds / cash)
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Expected Return
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Approx. Volatility
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Typical 1-Year Range (±1σ)
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Your allocation
Example Mix by Risk Profile (for your horizon)
| Profile | Stocks | Bonds | Cash | Exp. return | Volatility |
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Assumptions & method
- Example rule of thumb: base stock share of 25% (conservative), 50% (moderate), 70% (growth) or 90% (aggressive); minus 20 points for horizons up to 3 years, minus 10 for under 7 years, plus 5 for 15 years or more (maximum 95%). Of the remainder, the cash share is 50%, 30%, 20% or 10% as the horizon lengthens and the rest goes to bonds.
- Expected return = Σ weight × asset return.
- Portfolio variance = Σᵢ Σⱼ wᵢ wⱼ σᵢ σⱼ ρᵢⱼ, with ρ = 1 for an asset against itself; volatility is its square root.
- The one-year range is expected return ± one volatility; it is not a limit on possible gains or losses.
- Asset assumptions are editable placeholders, not forecasts. Fees, taxes, rebalancing, inflation and other asset classes are not included. This is not investment advice.
Results are estimates based on the figures you enter. They are not guarantees and not financial advice.
How asset allocation shapes risk and return
Asset allocation is the split of a portfolio between asset classes such as stocks, bonds and cash. It is one of the main drivers of both long-run growth and the size of the swings you have to live with. Stocks have historically offered higher expected returns with larger swings, bonds sit in the middle and cash is stable but grows slowly. This calculator proposes an example mix from a simple rule of thumb, lets you override it, and then works out the weighted expected return and an approximate volatility using return, volatility and correlation assumptions you can edit.