Calculate suggested asset allocation from your age and risk tolerance

What portfolio allocation actually means

Portfolio allocation is the split of your investable assets across asset classes — typically stocks (growth), bonds (stability and income), and cash (liquidity). The right split depends primarily on time horizon and risk tolerance, not on what markets are doing today. A 30-year-old investing for retirement at 65 has 35 years of runway; short-term market moves are mostly noise. A 63-year-old approaching retirement needs different positioning because drawdowns close to withdrawal can be devastating.

How the math works

The classical starting point is the 100-minus-age rule: stock allocation percentage = 100 − age. At 30, you would hold 70% stocks; at 60, 40%. Modern variants use 110 or 120 minus age (120 minus age at 30 is 90% stocks) to reflect longer life expectancies and the long-run outperformance of equities. The calculator applies a risk-tolerance adjustment on top: higher risk tolerance pushes the stock weight up; lower risk tolerance pulls it down. Bond allocation is the remainder after subtracting stocks and a small cash buffer for liquidity.

The three standard risk profiles

Conservative: Prioritises capital preservation. Stock allocation typically 30-50% of the age-based starting point. Appropriate for investors near or in retirement, or with low tolerance for drawdowns. Higher bond and cash allocations mean smaller expected returns but also smaller variance.

Moderate: Balances growth and stability. Stock allocation close to the standard 100-minus-age or 110-minus-age formula. Appropriate for investors with medium time horizons (10-25 years) and moderate risk tolerance. This is the default for most retirement accounts.

Aggressive: Prioritises long-term growth, accepts larger drawdowns. Stock allocation often 90-100% for decades before retirement. Appropriate for investors with 25+ year horizons, psychological comfort with volatility, and no near-term need for the capital. Historically delivers higher expected returns but requires the discipline to hold through bear markets.

Why correlations matter more than exact percentages

The specific percentages matter less than the correlation properties of the holdings. A 60/40 portfolio of similarly-correlated assets (US large-cap stocks and US investment-grade bonds) behaves differently than a 60/40 portfolio of diversified global equities and short-duration bonds. The allocation framework suggests the direction; the implementation within each bucket determines the actual risk-return profile. For most retail investors, low-cost broad-market index funds in each asset class deliver appropriate diversification without requiring complex security selection.

Rebalancing the allocation

Over time, market movements shift the actual allocation away from the target. If stocks have a great year, the stock weight grows above target; if bonds outperform, the opposite happens. Rebalancing periodically (typically annually) sells the over-weighted asset class and buys the under-weighted one, mechanically buying low and selling high. The benefit is risk control rather than return enhancement — rebalanced portfolios have similar average returns to unrebalanced ones over long periods, but much lower volatility.