Comprehensive Guide
Learn more in our Investing Guide.
How it works
The stock/bond/cash split is the single decision that explains most of what a portfolio returns — research on portfolio outcomes consistently finds the allocation dwarfs fund selection and market timing. This calculator turns a chosen mix into numbers: it blends your three expected returns into one weighted rate (70% stocks at 8%, 25% bonds at 4%, 5% cash at 2% blends to about 6.7%), then compounds the invested amount at that rate over your horizon to project the final value and total gain. The weights must sum to 100% — the calculator checks. Two honest cautions ride with the projection. It compounds a single smooth rate, which hides the year-to-year swings a real portfolio delivers — treat the result as the centre of a range, not a promise, and remember the stock-heavy mixes that project highest are precisely the ones with the deepest drawdowns along the way. And watch the cash: at a 5% weight earning 2%, every point moved from cash to stocks adds roughly a tenth of a point to the blended return — but the same amount of extra volatility. The right mix is the most aggressive one you can hold through a crash without selling, not the one with the biggest projected number.Formula
Blended = (stock% x stock return + bond% x bond return + cash% x cash return); then compound
Tips
- The mix explains most of a portfolio's outcome — set it on purpose, then hold it.
- Cash is the quiet drag: every point moved to stocks raises return and volatility together.
- The projection compounds one smooth rate — real returns arrive in swings around it.
- Choose the most aggressive mix you can hold through a crash without selling.
- Revisit the mix when life changes, not when headlines do.
Frequently asked questions
What is asset allocation?
How a portfolio splits between stocks, bonds and cash. It is the dominant driver of long-run outcomes — research consistently finds the allocation explains most of the variation in returns, while which funds you pick and when you trade explain little. Set the mix deliberately.
How do I calculate a blended portfolio return?
Multiply each asset's weight by its expected return and add the results. 70% stocks at 8%, 25% bonds at 4% and 5% cash at 2% blends to about 6.7% a year. The calculator then compounds that rate over your horizon to project the ending value.
What is a good asset allocation?
The most aggressive mix you can hold through a crash without selling. A common starting point is a stock percentage around 110 or 120 minus your age, with the rest in bonds and cash — but the right answer depends on your horizon and your temperament more than any formula.
How does cash affect portfolio returns?
It drags. Cash earns the least of the three sleeves, so every point held in cash lowers the blended return — at typical rates each point moved from cash to stocks adds roughly a tenth of a point of expected return, along with the same measure of added volatility.
Should my allocation change over time?
With life, not with headlines. Approaching retirement, shortening horizons usually argue for shifting some stock weight into bonds and cash to protect what you have built — target-date funds automate exactly this glide path. But rebalancing the mix back to target beats abandoning it when markets swing.