How Much of Your Money Should Be in Stocks vs. Bonds

Man looking at stock and bond portfolio balances on a tablet
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When you build a portfolio, one of the first decisions to make is choosing how much of your money you want to invest in stocks vs. bonds. The right answer depends on many things, including your experience as an investor, your age, and the investment philosophy you plan on using. Most people will benefit from a long-term investing strategy.

When adopting a long-term viewpoint, you can use something called strategic asset allocation to determine what percentage of your investments should be in stocks vs. bonds. With this approach, you choose your investment mix based on historical measures of the rates of return and levels of volatility (risk as measured by short-term ups and downs) of different asset classes. For example, stocks have historically had a higher rate of return than bonds when measured over the long-term, but have more volatility in the short-term.

The four allocation samples below are based on a strategic approach, meaning you are looking at the outcome over 15 years or more. When investing in life, you don't measure success by looking at returns daily, weekly, monthly, or even yearly. Instead, you look at the results over multiple-year periods.

Ultra Aggressive

If your goal is to achieve returns of 9% or more, you should allocate 100% of your portfolio to stocks. You must expect that at some point with this approach you will experience a calendar quarter where your portfolio loses as much as 30%, and perhaps even an entire calendar year where your portfolio is down as much as 60%. That means for every $10,000 invested, the value could drop to $4,000. Over many, many years, the down years (which, in historical measures, happened about 30% of the time) should be offset by the positive years (which historically occurred about 68% of the time).

Moderately Aggressive

If you want to target a long-term rate of return of 8% or more, allocate 80% of your portfolio to stocks and 20% to cash and bonds. With this approach, expect that at some point you could experience a single calendar quarter where your portfolio drops 20% in value, and perhaps even an entire year where your portfolio drops by as much as 40%. But the idea is that it will recover (and then some) over the long term. It is best to rebalance this type of allocation about once a year.

Moderate Growth

If you want to target a long-term rate of return of 7% or more, allocate 60% of your portfolio to stocks and 40% to cash and bonds. With this allocation, a single quarter or year could see a 20% drop in value. It is best to rebalance this type of allocation about once a year.


If you are more concerned with preserving your capital than achieving higher returns, then invest no more than 50% of your portfolio in stocks. You may still have volatility with this approach and could see a calendar quarter or a year where your portfolio falls by 10%.

Investors who want to avoid risk entirely should consider sticking with safer investments like money markets, CDs, and bonds, avoiding stocks altogether.

Retirement Considerations

The allocation models above provide a guideline for investors who haven't retired yet, they aim to maximize returns while keeping the portfolio from exceeding a certain level of risk. That may not suit you when you shift to retirement when you will need to take regular withdrawals from your savings and investments.

At that phase of life, your investment goal changes from maximizing returns to delivering reliable income. A portfolio built to maximize returns may not be as effective at generating consistent income due to its volatility.

If you are near retirement, check out some alternative approaches to allocation. For example, in retirement, you might calculate the amount you need to withdraw over the next five to 10 years, and decide that's the portion of your portfolio to allocate to bonds, with the remainder invested in stocks. With that strategy, your immediate needs are safely invested but you allow some room for growth. However, the portion invested in stocks is still subject to volatility, which you should monitor carefully.

The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.