Asset Allocation Calculator

Whether you’re saving up for retirement, planning to purchase a home, or hoping to put aside money for a new car, investing your money is a great way to help your assets grow.

Of course, you’ll have to first determine what types of assets will best suit your unique financial goals and needs.

This means understanding how investment strategies, like the right asset allocation, can influence performance, risk, financial goals, and overall investment time.

What is Asset Allocation?

According to Investopedia, “asset allocation is an investment strategy that aims to balance risk and reward by apportioning a portfolio’s assets according to an individual’s goals, risk tolerance and investment horizon.”

This is a longer way of saying that investors need to make sure that their money is being sent to the best and most effective places for their needs.

Because each investor has their own unique goals, level of desired risk, and total investment time, there is no “one size fits all” solution.

For example, let’s say that you are planning on purchasing a new car within the next few years. Your asset allocation for your car savings may consist of short-term bonds, a few 12-month CDs, and cash deposited into a money market savings account.

On the other hand, if you are planning on saving for retirement, your asset allocation will look much different. With decades of time for your savings to grow, your asset allocation may consist of a 401k and a few IRAs.

Of course, the scenarios described above are also subject to fluctuations in risk tolerance between individual investors. Along with the basic composition of a portfolio, your personal asset allocation relies on whether you are most comfortable with high or low levels of risk.

Investors should also consider an additional factor when choosing their asset allocation—their liquidity needs. If you think that you might need to access your investments for some extra cash later on—or if you simply want to have the option—then you will want to use assets that have liquidity.

Whether you’ll need to access your investments before they are done maturing is an important consideration to take when creating a portfolio, and will have a strong influence in asset allocation.

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Major Asset Categories (Asset Allocation Calculator)

Asset allocation means finding the best investments for you—but what do these investments look like? How can you choose the type of asset allocation that is right for you?

There are three main asset categories to choose from: split between stocks, bonds, and cash.


Of the three, stocks will have the greatest growth potential, but that also means that they have the highest level of risk. Values within the stock market are subject to fluctuation, meaning that these types of investments can be extremely volatile.

For example, owning stock in a large company can be very profitable, and even relatively dependable over time. However, if the company experiences a downturn—or even receives negative press—the stock can immediately plummet.

If you are patient—and resilient—enough to deal with a high-risk, high reward scenario, stocks are often the most rewarding type of investment to make.


Bonds have a lower growth potential, but they also have the benefit of being a low-risk asset. As a result, most investors will increase bond holdings to balance out the overall risk level of their portfolio.

In some cases, bonds are also a versatile type of asset to invest in. While many bonds are low-risk assets, there are a few types of bonds that come with higher risk and return levels, making them perform similar to stocks.


For investors looking for safe, reliable investments, cash and cash-related assets are the way to go. Popular examples include high-yield savings accounts, money market accounts, and certificates of deposit (CD).

The rates of return are typically very low for these assets, but they come with virtually zero risk and varying levels of liquidity. CDs often come with short maturation periods, and most high-yield savings and money market accounts allow for periodic withdrawals.

The catch with cash-related assets is that, over time, inflation could impact your investment return. No investment is without some degree of risk, but cash-related investments remain the safest and most dependable way to grow your assets.

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