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Asset Allocation Calculator

What is Asset Allocation?

Asset allocation is the process of distributing investments among various asset classes, such as stocks, bonds, and cash, to balance risk and reward based on an individual's retirement timeline, risk tolerance, and financial goals.


Having an appropriate asset allocation helps in managing risk and enhancing returns over the long term, ensuring that the portfolio is well-positioned to grow while minimizing the impact of market volatility.


Effective asset allocation allows retirees to maintain a desired level of income during retirement while preserving capital, making it a fundamental strategy for achieving long-term financial security.

How do my risk preferences factor into my allocation?

Risk preferences play an important role in the asset allocation process, as they determine the proportion of investments in higher volatility investments, such as stocks, and lower volatility investments, such as bonds.


Investors with a higher risk tolerance may allocate a larger portion of their portfolio to stocks for potentially higher returns, whereas those with lower risk tolerance might prefer bonds and cash equivalents, seeking stability and preservation of capital.


Understanding your risk preferences is essential for crafting an asset allocation strategy that aligns with your financial goals, time horizon, and comfort level with market fluctuations, ensuring a balance between risk and potential rewards.

What is the relationship between volatility and returns?

Volatility and long-term returns tend to be strongly correlated, where investments with higher volatility, such as stocks, offer the potential for higher long-term returns compared to less volatile assets like bonds.


This is because investors demand a premium for taking on greater risk, implying that while volatile investments can experience significant short-term price fluctuations, they may yield superior returns over the long haul as compensation for enduring uncertainty.

The key to a successful portfolio allocation is balancing your willingness to withstand downward account fluctuations against long-term returns.


The calculator below can be used to determine an appropriate asset allocation based on your unique risk preferences.

The calculators on the site provide a high level overview of your financial picture.  For comprehensive planning, schedule a meeting.


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