Asset Allocation Model

asset allocation model

Asset Allocation Model

What does your investment portfolio look like? Do you know if your portfolio is over weight in stocks? Do you have different funds with an overlap of the same stocks? Can you stomach another big market downturn? We have all heard about asset allocation models, but what should it look like?

The first thing to understand are the different types of asset classes. Stocks, bonds, commodities, cash, real estate. The purpose of asset allocation is to prevent wild swings in your portfolio, especially to the negative side.

The hardest thing to do is predict what the markets next and we should not try to time the markets. So having an asset allocation that allow you to sleep at night and work for you is important. But what should it look like? First let’s look at the different allocation classes

  • Stocks – Historically have outperformed other investments over long periods (keep in mind that past performance does not guarantee future results)
    • Risk – high, volatile in the short term
  • Bonds – Value fluctuates due to current interest and inflation rates
    • Risk – low, more stable than stock
  • Commodities – Helps protect future purchasing power as values have fixed utility and thus run parallel to inflation
    • Risk – high, Values tend to exhibit low correlations with stock and bond prices
  • Real Estate – Helps protect future purchasing power as property values and rental income run parallel to inflation
    • Risk – low, with the exception of 2008 housing market crash

The following is a model of asset allocation suggested by Ray Dalio in Tony Robbins book Money Master the Game

For this to work as With any asset allocation it is extremely important to rebalance on a quarterly basis or at a minimum yearly basis.


If the 7.5% commodities bothers you consider replacing some of the 7.5% exposure with REITs. In addition you could add another slice for cash and just adjust the pie appropriately.

Other Models (Charles Schwab)

Here are some other Asset Allocation Model Ideas


Schwab Aggressive Model


Schwab Moderate Model


Schwab Conservative Model

Schwab Asset Allocation Models

Asset Allocation Model
Asset Allocation Model
Asset Allocation Model
Asset Allocation Model
Asset Allocation Model
Asset Allocation Model