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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

100% bonds
Historical Risk/Return (1926–2016)
Average annual return 5.4%
Best year (1982) 32.6%
Worst year (1969) –8.1%
Years with a loss

14 of 91

20% stocks/ 80% bonds

20% stocks/ 80% bonds
Historical Risk/Return (1926–2016)
Average annual return 6.6%
Best year (1982) 29.8%
Worst year (1931) –10.1%
Years with a loss 12 of 91

30% stocks/ 70% bonds

30% stocks/ 70% bonds
Historical Risk/Return (1926–2016)
Average annual return 7.2%
Best year (1982) 28.4%
Worst year (1931) –14.2%
Years with a loss 14 of 91

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

40% stocks / 60% bonds
Historical Risk/Return (1926–2016)
Average annual return 7.8%
Best year (1933) 27.9%
Worst year (1931) –18.4%
Years with a loss 16 of 91

50% stocks / 50% bonds

50% stocks / 50% bonds
Historical Risk/Return (1926–2016)
Average annual return 8.3%
Best year (1933) 32.3%
Worst year (1931) –22.5%
Years with a loss 17 of 91

60% stocks / 40% bonds

60% stocks / 40% bonds
Historical Risk/Return (1926–2016)
Average annual return 8.7%
Best year (1933) 36.7%
Worst year (1931) –26.6%
Years with a loss 21 of 91

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

70% stocks / 30% bonds
Historical Risk/Return (1926–2016)
Average annual return 9.1%
Best year (1933) 41.1%
Worst year (1931) –30.7%
Years with a loss 22 of 91

80% stocks / 20% bonds

80% stocks / 20% bonds
Historical Risk/Return (1926–2016)
Average annual return 9.5%
Best year (1933) 45.4%
Worst year (1931) –34.9%
Years with a loss 23 of 91

100% stocks

100% stocks
Historical Risk/Return (1926–2016)
Average annual return 10.2%
Best year (1933) 54.2%
Worst year (1931) –43.1%
Years with a loss 25 of 91

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 Citigroup 3-Month U.S. Treasury Bill Index thereafter.

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