Asset Allocation Calculator

Investment asset allocation spreads a portfolio across asset classes (stocks, bonds, cash, real estate, alternatives) to balance expected return against risk tolerance. Age-based allocation is the most common starting framework, reflecting the principle that younger investors can tolerate more volatility because they have more time to recover from market downturns.

The rule this calculator uses: Stock % = 110 − Age, then ±10 for risk tolerance.

The older textbook rule was 100 − Age. It was written when people retired at 65 and died at 72, and it leaves a modern retiree far too little growth for a 30-year retirement. 110 − Age is the common updated version. You will also see 120 − Age quoted as the aggressive variant, and that is exactly what the Aggressive setting here produces: 110 − Age + 10 is the same number as 120 − Age.

Cash is carved out separately. Most age-based rules split the world into stocks and bonds only, which is tidy but not how anyone actually invests. This calculator holds back 5% cash under 40, 10% from 40 to 55, and 15% after that, with another 5% for a conservative profile. Bonds then take whatever is left:

Bond % = 100 − Stock % − Cash %

That cash slice is your dry powder for rebalancing, not your emergency fund. Keep 3 to 6 months of expenses somewhere else entirely, outside the investment portfolio, or a bad month forces you to sell stocks at the worst possible time.

Splitting the equity side (three-fund style):

• US Total Stock Market: Stock % × 0.60
• International Stock: Stock % × 0.40
• Total Bond Market: Bond %

Historical average returns by asset class (US, 1928–2023):

• US Large-cap stocks (S&P 500): ~10.2% nominal, ~7.2% real
• US Bonds (10-year Treasury): ~4.6% nominal, ~1.7% real
• Cash (T-bills): ~3.3% nominal, ~0.4% real

Worked example: A 35-year-old with moderate risk tolerance and $150,000 invested.

• Stocks: 110 − 35 = 75%
• Cash: 5% (under 40)
• Bonds: 100 − 75 − 5 = 20%

Split into dollars:

• US stocks (75% × 0.60 = 45%): $150,000 × 0.45 = $67,500
• International stocks (75% × 0.40 = 30%): $150,000 × 0.30 = $45,000
• Bonds: $150,000 × 0.20 = $30,000
• Cash: $150,000 × 0.05 = $7,500

Set the same person to Aggressive and stocks go to 85%, bonds fall to 10%, cash stays at 5%.

Twenty years on, at 55 and still moderate, the mix is 55% stocks / 35% bonds / 10% cash. Nobody rebalances from 75 to 55 in one move. It drifts down about a point a year, which is the whole idea.