Asset Allocation by Age Calculator
Find your recommended stock, bond, and cash split based on your age, risk tolerance, and goals — with example funds for each allocation.
Why Age Matters in Asset Allocation
Stocks offer the highest long-term returns but come with significant short-term volatility. When you're young, you have decades to ride out market downturns — so you can hold a larger stock allocation. As you approach retirement, you have less time to recover from a major loss, making it prudent to shift toward more stable assets like bonds and cash.
What Bonds Do in a Portfolio
Bonds are loans to governments or corporations that pay regular interest. They tend to move differently from stocks — when stocks fall sharply, high-quality government bonds often rise or hold steady, providing a cushion. Bonds reduce your portfolio's volatility at the cost of some long-term return. BND (Vanguard Total Bond Market ETF) provides broad exposure to U.S. investment-grade bonds.
Lifecycle Investing and the Glide Path
The idea of gradually shifting from stocks to bonds as you age is called a "glide path." Target-date funds automate this entirely — a 2055 target-date fund, for instance, starts heavily in equities and automatically shifts toward bonds as 2055 approaches. Vanguard's Target Retirement Funds (e.g., VTTSX) are a popular low-cost option, charging around 0.08% expense ratio.
Target-Date Funds as an Automated Alternative
If managing your own allocation feels complex, target-date funds do it for you in a single fund. Pick the fund with the year closest to your planned retirement. The fund automatically rebalances and adjusts its glide path. This is the default option in many 401k plans and is an excellent choice for investors who want a set-it-and-forget-it approach.