Comments on: Best Asset Allocation For Young Investors https://thecollegeinvestor.com/19023/investing-asset-allocation/ Navigating Money And Education Thu, 03 Oct 2024 16:42:44 +0000 hourly 1 By: Robert Farrington https://thecollegeinvestor.com/19023/investing-asset-allocation/#comment-394141 Thu, 19 Dec 2019 22:39:26 +0000 https://thecollegeinvestor.com/?p=19023#comment-394141 In reply to t.

I use a tool called Portfolio Visualizer – which is free and exactly made for this type of thing!

The volatility reduction is about 18-20%.

The following happens over the past 10 years (2009-2019):
Return
100% Stocks- 14.44% AAR
80/20 – 12.41% AAR

Volatility
100% Stocks- 14.00%
80/20 – 11.43%

But here’s an interesting thing, what if we changed the timeline to 2000-2010:
Return
100% Stocks- 1.2% AAR
80/20 – 2.6% AAR

Volatility
100% Stocks- 16.86%
80/20 – 14.60%

Okay, but what about long term? How about 1972 to now?
Return
100% Stocks- 10.28% AAR
80/20 – 9.64% AAR

Volatility
100% Stocks- 14.96%
80/20 – 12.03%

Over the long run, you get 0.64% less return, but you get almost 3% less volatility. And the growth difference of $10,000 over the time period is $44k.

]]> By: t https://thecollegeinvestor.com/19023/investing-asset-allocation/#comment-394114 Thu, 19 Dec 2019 20:02:28 +0000 https://thecollegeinvestor.com/?p=19023#comment-394114 Over 10 years, what is the real dollar difference in return between a portfolio that is 100% stocks, versus one that is 80% stocks and 20% bonds? I’d expect the 100% stock portfolio to be a lot bigger than the bond infected portfolio.
Now, what is the expected reduction in volatility? Very little, am I right?
I am guessing.

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