Asset Allocation


After you create your account, you can personalize your portfolio and begin your journey with FutureAdvisor.

The first step is to decide what types of assets will receive the most amount of money. This decision will become your asset allocation. FutureAdvisor requires three pieces of information in order to design your allocation: age, target age of retirement, and your risk preference.

1) Selecting investment horizon: age & retirement age

The investment horizon, or time horizon, is simply the total length of time that you expect to hold the portfolio. One day, your livelihood will depend on this capital. The more time you have before that day, the more risk you can reasonably carry -- since you have more time to recoup a loss. As the investment horizon is reduced year by year, the portfolio's risk should be reduced a proportionate amount.

Indeed, one mostly holds bonds by the time they retire.

Use the first slider to select your current age. In general, clients must be between the ages of 18-68. We cannot take any retirement accounts that are in or will soon be in the distribution phase. If you are older than 68 and would like us to manage a normal taxable account, we'll be thrilled to do so, assuming your investment horizon is greater than two years.

The second slider can be used to indicate your expected date of retirement, the year you'll need your money. FutureAdvisor will only take accounts with investment horizons that exceed two years.

If you're older than 68 years of age and are applying to premium, select 68 anyway and give us heads up -- we'll correct this information upon receiving your application.


2) Selecting risk tolerance: conservative, moderate, and aggresive

The other determining factor on your portfolio's allocation and design is how much risk you personally would like to bear. FutureAdvisor offers three levels of portfolio risk: Conservative, Moderate, and Aggressive. The one you choose determines how much money will be placed in stocks, or equities; the remainder of your portfolio will hold bonds.

Remember: stock usually provides a much higher return in comparison to bonds; however, it also has much more risk, and you'll have to stomach periods of loss on a more frequent basis.

If you're patient, disciplined, and calculating, and if you can emotionally handle loss, aggressive may be right for you. If uncertainty can work you up, cause anxiety, or if you tend to be impulsive, you may opt for something a bit more consistent.

In any case, please keep in mind, your livelihood will one day depend on this capital, this is the last account within which one should speculate.


The following gives an example of an aggressive asset allocation appropriate for a 30 year old, expecting to retire at 75. Notice that only 7% of the entire portfolio will hold bonds at this period in time.


Financial Profile

Action Plan