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.
Historical Risk/Return (1926–2019)
| Average annual return | 6.0% |
| Best year (1982) | 45.5% |
| Worst year (1969) | –8.1% |
| Years with a loss | 19 of 94 |
Historical Risk/Return (1926–2019)
| Average annual return | 7.1% |
| Best year (1982) | 40.7% |
| Worst year (1931) | –10.1% |
| Years with a loss | 16 of 94 |
Historical Risk/Return (1926–2019)
| Average annual return | 7.7% |
| Best year (1982) | 38.3% |
| Worst year (1931) | –14.2% |
| Years with a loss | 18 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.
Historical Risk/Return (1926-2019)
| Average annual return | 8.1% |
| Best year (1982) | 35.9% |
| Worst year (1931) | –18.4% |
| Years with a loss | 19 of 94 |
Historical Risk/Return (1926-2019)
| Average annual return | 8.6% |
| Best year (1982) | 33.5% |
| Worst year (1931) | –22.5% |
| Years with a loss | 20 of 94 |
Historical Risk/Return (1926-2019)
| Average annual return | 9.0% |
| Best year (1933) | 36.7% |
| Worst year (1931) | –26.6% |
| Years with a loss | 22 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.
Historical Risk/Return (1926-2019)
| Average annual return | 9.4% |
| Best year (1933) | 41.1% |
| Worst year (1931) | –30.7% |
| Years with a loss | 23 of 94 |
Historical Risk/Return (1926-2019)
| Average annual return | 9.7% |
| Best year (1933) | 45.4% |
| Worst year (1931) | –34.9% |
| Years with a loss | 24 of 94 |
Historical Risk/Return (1926-2019)
| Average annual return | 10.2% |
| Best year (1933) | 54.2% |
| Worst year (1931) | –43.1% |
| Years with a loss | 25 of 94 |