Model Portfolios: Sample Allocations by Age and Risk Tolerance

Knowing what asset allocation is doesn't tell you what percentage of your own money should be in stocks versus bonds. These are concrete starting-point templates — not personalized advice — built around the same principles every major brokerage and academic study on the topic agrees on: your mix should reflect your time horizon and your ability to stomach a downturn, not your mood about the market this week.

The One Lever That Matters Most: Stocks vs. Bonds

Every model portfolio below is really just a variation on one decision: what percentage sits in stocks (higher expected return, higher volatility) versus bonds (lower expected return, more stability). Everything else — which funds, which sectors, international exposure — is a refinement on top of that one split.

Three Templates by Risk Tolerance

By Age: A Common Starting Rule

A widely used (and widely debated) rule of thumb: subtract your age from 110 or 120 to get a starting stock percentage. It's a simplification, not a formula — but it captures the real principle that your capacity for risk generally shrinks as your time horizon shortens.

These are illustrative reference points, not formulas. Someone with a pension, high risk tolerance, or income outside the market may reasonably run more equity-heavy at any age — and someone who needs the money soon should run more conservative regardless of age.

The Simplest Version: The Three-Fund Portfolio

Popularized by Vanguard founder John Bogle and his followers (the "Bogleheads"), this approach builds the entire portfolio from three broad, low-cost index categories instead of picking individual holdings:

• A total U.S. stock market index fund — broad domestic equity exposure in one holding.
• A total international stock market index fund — diversification outside the U.S.
• A total bond market index fund — the stability side of the split.

You then weight the three funds according to whichever stock/bond split from above fits your situation, and split the stock portion between U.S. and international however you're comfortable (a common range is 70–80% U.S., 20–30% international). Some investors simplify even further to two funds by skipping the international split entirely.

Common Mistakes

• Chasing last year's winner. Shifting allocation toward whatever asset class just performed best is the opposite of the discipline a model portfolio is supposed to provide.
• Setting it once and never rebalancing. A 60/40 portfolio left alone for a decade of strong stock returns can quietly drift to 80/20 — see What Is Portfolio Rebalancing?
• Confusing risk tolerance with risk capacity. How you'd feel about a 30% drop and whether you can actually afford one are different questions — see What Is Risk Tolerance?
• Copying someone else's allocation. A 90/10 split that's right for a 28-year-old with a stable job is not automatically right for a 58-year-old five years from retirement, even if both consider themselves "aggressive investors."