Moneyzine
/Investment Guides /Asset Allocation Calculator

Asset Allocation Calculator

Moneyzine Editor
Author: 
Moneyzine Editor
3 mins
October 4th, 2023
Advertiser Disclosure

This asset allocation calculator contains an automated risk tolerance questionnaire, which can help you determine a possible allocation of stocks, bonds, and cash for your investment portfolio. The calculator bases its allocation recommendation on your answers to six different measures of risk contained in the quiz. The calculator's output includes a description of the portfolio, as well as the percentages of stocks, bonds and cash.

Calculator Definitions

The variables used in our online calculator are defined in detail below, including how to interpret the results.

Years Until Retirement

There are four different levels for this question. The allocation rule here is simply the longer the time before retirement, the higher your potential risk tolerance.

Comfort with Stock Market

This question attempts to figure out how comfortable you are with the concept of investing in the stock market.

Investment Drop

This question tests your tolerance for a 20% drop in the value of your stock portfolio. For example, are you going to pull all of your money out of the stock market if its value drops by 20%?

Investor Knowledge Score

This is a subjective evaluation of your own knowledge and experience as an investor. In theory, the more knowledgeable, or experienced, you are with the stock market; the more aggressive the asset allocation can be in your portfolio.

Risk Comfort

This question attempts to figure out how comfortable you are with taking risks. For example, are you more comfortable with stable investments, or are you willing to accept fluctuations in the value of your portfolio in exchange for potentially higher returns in the long term?

Investment Gain / Loss

This final question asks you to choose between the acceptable gain and loss pairings for a $1,000 investment. For example, would you be willing to lose $300 in a given year for the potential to make $400?

Total Risk Tolerance

This section of the calculator provides you with your total risk tolerance score, which can range from six to twenty points, depending on how you responded during the quiz. The higher the risk tolerance score is, the more aggressive the recommended asset allocation portfolio will be.

Asset Allocation Result

In this section of the calculator, you can see a written description of the portfolio, which runs from "Preservation" - the most conservative allocation - through "All Stocks" - the most aggressive asset allocation portfolio. The calculator provides six different levels of stock / bond allocations, stated in terms of the percentage of your total investment portfolio.


Asset Allocation Calculator


Disclaimer: These online calculators are made available and meant to be used as a screening tool for the investor. The accuracy of these calculations is not guaranteed nor is its applicability to your individual circumstances. You should always obtain personal advice from qualified professionals.

Related Content

  • What Can Help You Meet Your Budget While Shopping for Important Items?
    Budgeting while ensuring you don't compromise on quality can seem daunting. Whether filling your pantry, updating your wardrobe, or keeping up with the latest tech, smart shopping strategies are crucial for keeping your finances in check.
    April 2nd, 2024
  • How to Make a Million Dollars in 10 Years
    Truthfully, this title should actually be “How to Make a Million Dollars in 10 Years Without Going Into Debt", but that is just getting a little too winded for my liking. It’s true though!
    November 18th, 2024
  • How to Apply Maslow’s Hierarchy to Your Money This Year
    You might vaguely remember your psychology teacher talking about Maslow. He pointed at a picture of a triangle as you nodded off in the back of the school room.
    November 18th, 2024
  • How to Tackle Multiple Savings Goals
    When there’s only so much money to go around, there are often multiple savings goals competing for your money. Think of the young professional who’d like to get a more reliable car, buy a house, and save for retirement. Or consider the young family that’s saving for college, retirement, and a bigger house.
    March 22nd, 2024
  • The Countdown to Early Retirement: 10 Expenses to Eliminate
    Dreaming of waving goodbye to the daily grind five years ahead of schedule? The road to early retirement is paved with more than good intentions; it requires a meticulously crafted strategy with surprising twists. It's not solely about what you should be doing—like diligently saving a portion of your income or investing wisely—but also about what you need to stop doing.
    March 22nd, 2024

Contributors

Moneyzine Editor
The Moneyzine editorial team consists of writers and content specialists with diverse backgrounds.
Moneyzine 2024. All Rights Reserved.