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.