Above is a link to the World’s simplest asset allocation calculator. More detailed calculators are found online, which involve asking a series of risk tolerance-based questions. The best, most-detailed I’ve seen is located at Schwab Intelligent Portfolios. You’ll need to create an account (not necessarily fund it, simply register to use the tool (this is not an endorsement as I am not an affiliate of Schwab).
The problem that occurs when calculating an asset allocation based on risk tolerance is this; the market environment influences an investor’s tolerance for risk. For instance, today’s ultra-conservative investor was yesterday’s aggressive investor. Many reading my blog posting NOW are only reading because 1) my posts are focused on risk & 2) my readers aren’t as aggressive after last week as they’ve been for the past several months. The thought and fear of losing money has an immediate and lasting impact on one’s attitude toward risk-taking.
Here’s my advice for my readers: Take a few moments to realize that bull markets do end and they can end suddenly as evidenced last week, not with a whimper. I am not announcing that last week ended the bull market. I believe this is a temporary setback BUT…. one may want to use the forthcoming bounce to lighten up on equities and raise cash. I believe the market will see new, all time highs once again but that could be the final up thrust before more fierce selling takes over. Use the next big rally (possibly as high as the 3000-level on the S&P 500, by Apil/May ’18) to lighten up and take long term profits. Lock in those gains, raise some cash as rates are headed higher over the next 12-18 months and you will earn a decent yield from savings accounts and CD’s.