7Jul/100
Allocate the future
I just came across a tool that seems pretty interesting (free registration required). It's a calculator that looks at the probability of getting a return over a period of time given your initial investments, monthly contributions, and the allocations of your investments. So, for example, if I have a $10,000 portfolio today, and invest $500 a month, then it tells me:
- if my portfolio is invested "moderately", I have a 71% chance of having $250,000 after 25 years
- if my portfolio is invested "aggressively", I have a 75% chance of the same
- if my portfolio is invested "conservatively", I have a 0% chance of having $500,000 after 25 years... oops...
"Modest", "aggressive" and "conservative" are pre-set asset allocations, but you can redefine these to match the allocation percentages in your portfolio, choosing from five asset types:
- cash holdings
- bond holdings
- large cap stocks
- small to medium cap stocks
- foreign stock
Try it out and see what you think.
