Asset Allocation Models

Best Asset Allocation for Millennials

All Millennial investors obviously prefer well above market gains for their retirement investment portfolio. Who wouldn’t? But if you’re a diligent saver, one who is using a dollar-cost averaging approach and saving weekly, bi-weekly or even monthly into your retirement account, you should concentrate on the returns you need to achieve your goal. This way of saving for retirement will get any Millennial rich (slowly). However, there is truly only one way to get rich…and that is in fact slowly.

What exactly should your asset allocation be as a Millennial investor? Look at the below historical data per investment mix to see which is right for you based off potential returns and risks. If you save regularly, will the below returns work for you? What about the potential risk? Can you stomach a 30-40% drop in your portfolio because of your high stock allocation (high risk/high reward, right?).

Remember, if you lose 25% of your portfolio in a given year, you need a return of 33% the following year just to get back to where you were prior to the lost. It gets worse if you lose even more. Lose 50% of your retirement portfolio, and then you need a 100% return the following year to return to where you were prior to the lost. Those are dramatic loses, but pretty sobering nonetheless. So you have to take these loses into consideration when constructing a Millennial retirement portfolio.

100% Stocks Asset Allocation

80% Stocks / 20% Bonds Asset Allocation

70% Stocks / 30% Bonds Asset Allocation

  • Average annual return = 9.1%
  • Best year (1933) = 41.1%
  • Worst year (1931) = -30.7%

60% Stocks / 40% Bonds Asset Allocation

50% Stocks / 50% Bonds Asset Allocation

  • Average annual return = 8.3%
  • Best year (1933) = 32.3%
  • Worst year (1931) = -22.5%

40% Stocks / 60% Bonds Asset Allocation

30% Stocks / 70% Bonds Asset Allocation

20% Stocks / 80% Bonds Asset Allocation

100% Bonds Asset Allocation


The aforementioned retirement asset allocation historic investment returns are from 1926-2016 (Source: Vanguard portfolio allocation models).