What is a good asset allocation model?

We can divide asset allocation models into three broad groups: Income Portfolio: 70% to 100% in bonds. Balanced Portfolio: 40% to 60% in stocks. Growth Portfolio: 70% to 100% in stocks. For long-term retirement investors, a growth portfolio is generally recommended. Whatever asset allocation model you choose, you need to decide how to implement it.

What is asset allocation?

Asset allocation refers to the ratio among different asset types in one's investment portfolio. Here we'll look at how to set one's portfolio asset allocation by age and risk tolerance, from young beginners to retirees, including calculations and examples. Disclosure: Some of the links on this page are referral links.

What are some examples of asset allocation models by age?

Let's look at some examples of asset allocation models by age. Using [age minus 20] for bond allocation, a starting age of 20, and a retirement age of 60, a one-size-fits-most allocation would be 80/20. This fits a young investor with a low risk tolerance and a middle-aged investor with a moderate risk tolerance.