How does the asset allocation tool work?

Our asset allocation tool shows you suggested portfolio breakdowns based on the risk profile that you choose. We use historical returns and standard deviations of stocks, bonds and cash to simulate what your return may be over time. We use a Monte Carlo simulation model to calculate the expected returns of 10,000 portfolios for each risk profile.

How do I set up an asset allocation?

Step 1: Look to outside guidance. The gold standard for setting an asset allocation is to employ a financial advisor who can recommend an appropriate mix of assets given your own situation: your proximity to retirement, how you're doing on your retirement savings, and your own comfort level with volatility, among other factors.

How do investors manage asset allocations?

Instead, investors have to rely on market history and a sober view of valuations for various asset classes to help guide their allocations. They can then fine-tune their allocations based on individual-specific factors, and monitor the portfolio's asset mix as they get closer to needing their money.