80% Stocks
Target allocation — 15% bonds, 5% cash
Allocation breakdown| Asset class | Target % |
|---|
| Stocks (equities) | 80% |
| Bonds (fixed income) | 15% |
| Cash & equivalents | 5% |
| Total | 100% |
Base stock allocation = 110 − age = 80%, adjusted by risk profile to 80%. A 5% cash baseline is held for liquidity.
How Age-Based Asset Allocation Works
Age-based asset allocation is a simple, time-tested framework for deciding how much of your portfolio to hold in stocks versus bonds. The core idea is that younger investors have a long time horizon and can tolerate short-term market swings, so they can afford to hold a higher proportion of stocks, which historically deliver higher long-run returns. As you approach retirement, the goal shifts toward preserving the wealth you have built, so the allocation gradually moves out of volatile stocks and into more stable bonds and cash.
The classic "110 minus your age" rule sets your stock allocation equal to 110 minus your age, with the remainder in bonds. A 30-year-old therefore holds 80% in stocks and 20% in bonds, while a 60-year-old holds 50% in stocks and 50% in bonds. This calculator applies that rule, then adjusts the stock allocation by your risk profile — a conservative investor holds 10% less in stocks, an aggressive investor 10% more — and reserves a 5% cash baseline for liquidity and emergencies.
Reading the Allocation Breakdown
The breakdown table shows your target percentages for stocks, bonds, and cash. In the default example, a 30-year-old with a moderate risk profile targets 80% stocks, 15% bonds, and 5% cash. The stock figure is the risk-adjusted result of the 110-minus-age rule, bonds fill the gap between stocks and the cash baseline, and the 5% cash reserve provides a buffer for short-term needs so you never have to sell investments at an inopportune time.
Practical Considerations
Age-based rules are a useful starting point, but they are not a substitute for a plan that reflects your full financial picture. Your actual allocation should also account for other income sources such as pensions and Social Security, your total savings relative to your spending needs, and your genuine tolerance for a 40% or 50% portfolio decline. Many target-date funds use a similar glide path that automatically de-risks as retirement approaches. Rebalance your portfolio at least annually to keep it near your target, and revisit the allocation whenever your life circumstances change materially.