Asset Allocation

The asset allocation is designed to help you create a balanced portfolio of investments. Your age, ability to tolerate risk and several other factors are used to calculate a desirable mix of stocks, bonds and cash. The calculated asset allocation is a great place to start your analysis in building a balanced portfolio. Click on the "View Report" button for a detailed look at your results.

Definitions

Current age Your current age. This is by far the most important aspect of asset allocation. For most people the majority of their portfolio is for their retirement. The younger you are, the less likely you need this money any time soon. This allows you to invest more aggressively in stocks that generally have the best long-term returns. As you get older, it is advisable to move more of your investments to securities with less fluctuation such as cash and bonds. This can help ensure the money is available when you need it. Current assets This is the total value of your investment portfolio. Our asset allocator increases your stock exposure as your portfolio increases. Generally speaking, larger portfolios are less likely to leave individuals cash poor in a market downturn. This allows people with large portfolios to invest a bit more aggressively. Savings per year This is the amount you will be adding to your investments each year. Like portfolio size, the more you invest the more aggressive your investments should be. Income required This is the percentage of income you will need from your investments. Most people do not require any income from their investments until they retire. Marginal tax rate The tax rate you expect to pay on your investments. Risk tolerance Your personal ability to tolerate your portfolio value fluctuating up and down. Many people overestimate their ability to tolerate risk. Unless you can handle a 20% decline in your portfolio during a stock market correction, you may wish to keep your risk tolerance at or below the mid-point. Economic outlook This is your view of future economic growth and the overall health of the economy. The better your outlook, the more aggressive you can be with your investments.