Vanguard portfolio allocation models
Income
An income-oriented investor seeks current income with minimal risk to principal, is comfortable with only modest long-term growth of principal, and has a short- to mid-range investment time horizon.
100% bonds
| Historical Risk/Return (1926–2017) | |
|---|---|
| Average annual return | 5.4% |
| Best year (1982) | 32.6% |
| Worst year (1969) | –8.1% |
| Years with a loss |
14 of 92 |
20% stocks/ 80% bonds
| Historical Risk/Return (1926–2017) | |
|---|---|
| Average annual return | 6.7% |
| Best year (1982) | 29.8% |
| Worst year (1931) | –10.1% |
| Years with a loss | 12 of 92 |
30% stocks/ 70% bonds
| Historical Risk/Return (1926–2017) | |
|---|---|
| Average annual return | 7.3% |
| Best year (1982) | 28.4% |
| Worst year (1931) | –14.2% |
| Years with a loss | 13 of 92 |
Balanced
A balanced-oriented investor seeks to reduce potential volatility by including income-generating investments in his or her portfolio and accepting moderate growth of principal, is willing to tolerate short-term price fluctuations, and has a mid- to long-range investment time horizon.
40% stocks / 60% bonds
| Historical Risk/Return (1926–2017) | |
|---|---|
| Average annual return | 7.8% |
| Best year (1933) | 27.9% |
| Worst year (1931) | –18.4% |
| Years with a loss | 14 of 92 |
50% stocks / 50% bonds
| Historical Risk/Return (1926–2017) | |
|---|---|
| Average annual return | 8.4% |
| Best year (1933) | 32.3% |
| Worst year (1931) | –22.5% |
| Years with a loss | 17 of 92 |
60% stocks / 40% bonds
| Historical Risk/Return (1926–2017) | |
|---|---|
| Average annual return | 8.8% |
| Best year (1933) | 36.7% |
| Worst year (1931) | –26.6% |
| Years with a loss | 20 of 92 |
Growth
A growth-oriented investor seeks to maximize the long-term potential for growth of principal, is willing to tolerate potentially large short-term price fluctuations, and has a long-term investment time horizon. Generating current income is not a primary goal.
70% stocks / 30% bonds
| Historical Risk/Return (1926–2017) | |
|---|---|
| Average annual return | 9.3% |
| Best year (1933) | 41.1% |
| Worst year (1931) | –30.7% |
| Years with a loss | 21 of 92 |
80% stocks / 20% bonds
| Historical Risk/Return (1926–2017) | |
|---|---|
| Average annual return | 9.6% |
| Best year (1933) | 45.4% |
| Worst year (1931) | –34.9% |
| Years with a loss | 23 of 92 |
100% stocks
| Historical Risk/Return (1926–2017) | |
|---|---|
| Average annual return | 10.3% |
| Best year (1933) | 54.2% |
| Worst year (1931) | –43.1% |
| Years with a loss | 25 of 92 |
When determining which index to use and for what period, we selected the index that we deemed to be a fair representation of the characteristics of the referenced market, given the information currently available.
For U.S. stock market returns, we use the S&P 90 Index from 1926 through March 3, 1957; the S&P 500 Index from March 4, 1957, through 1974; the Dow Jones U.S. Total Stock Market Index (formerly known as the Dow Jones Wilshire 5000 Index) from 1975 through April 22, 2005; the MSCI US Broad Market Index from April 23, 2005, through June 2, 2013; and the CRSP US Total Market Index thereafter.
For U.S. bond market returns, we use the S&P High Grade Corporate Index from 1926 through 1968; the Citigroup High Grade Index from 1969 through 1972; the Lehman Brothers U.S. Long Credit AA Index from 1973 through 1975; the Bloomberg Barclays U.S. Aggregate Bond Index from 1976 through 2009; and the Bloomberg Barclays U.S. Aggregate Float Adjusted Index thereafter.
For U.S. short-term reserves, we use the Ibbotson U.S. 30-Day Treasury Bill Index from 1926 through 1977 and the FTSE 3-Month U.S. Treasury Bill Index thereafter.