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Vanguard portfolio allocation models

How do you choose how much you want to invest in stocks or bonds? These allocation models can help you understand different goals-based investment strategies. There's no right or wrong model, so it's important to tune in to what you feel best fits your goals and risk tolerance.

Income

An income portfolio consists primarily of dividend-paying stocks and coupon-yielding bonds. If you're comfortable with minimal risk and have a short- to midrange investment time horizon, this approach may suit your needs. Keep in mind, depending on the account, dividends and returns can be taxable.

100% bonds

Historical Risk/Return (1926–2019)

Average annual return6.0%
Best year (1982)45.5%
Worst year (1969)–8.1%
Years with a loss19 of 94


20% stocks / 80% bonds

Historical Risk/Return (1926–2019)

Average annual return7.1%
Best year (1982)40.7%
Worst year (1931)–10.1%
Years with a loss16 of 94


30% stocks / 70% bonds

Historical Risk/Return (1926–2019)

Average annual return7.7%
Best year (1982)38.3%
Worst year (1931)–14.2%
Years with a loss18 of 94


Balanced

A balanced portfolio invests in both stocks and bonds to reduce potential volatility. An investor seeking a balanced portfolio is comfortable tolerating short-term price fluctuations, is willing to tolerate moderate growth, and has a mid- to long-range investment time horizon.

40% stocks / 60% bonds

Historical Risk/Return (1926-2019)

Average annual return8.1%
Best year (1982)35.9%
Worst year (1931)–18.4%
Years with a loss19 of 94


50% stocks / 50% bonds

Historical Risk/Return (1926-2019)

Average annual return8.6%
Best year (1982)33.5%
Worst year (1931)–22.5%
Years with a loss20 of 94


60% stocks / 40% bonds

Historical Risk/Return (1926-2019)

Average annual return9.0%
Best year (1933)36.7%
Worst year (1931)–26.6%
Years with a loss22 of 94


Growth

A growth portfolio consists of mostly stocks expected to appreciate, taking into account long-term potential and potentially large short-term price fluctuations. An investor seeking this portfolio has a high risk tolerance and a long-term investment time horizon. Generating current income isn’t a primary goal.

70% stocks / 30% bonds

Historical Risk/Return (1926-2019)

Average annual return9.4%
Best year (1933)41.1%
Worst year (1931)–30.7%
Years with a loss23 of 94


80% stocks / 20% bonds

Historical Risk/Return (1926-2019)

Average annual return9.7%
Best year (1933)45.4%
Worst year (1931)–34.9%
Years with a loss24 of 94


100% stocks

Historical Risk/Return (1926-2019)

Average annual return10.2%
Best year (1933)54.2%
Worst year (1931)–43.1%
Years with a loss25 of 94