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Asset Allocation Models The asset allocation process involves several steps; however, once completed, it provides a "master plan" from which all future investment decisions can be made. Each of these four model portfolios has been created to have varying degrees of volatility. For instance, the conservative portfolio has a mixture of 10% cash, 70% bonds and 20% stocks. This has a very low volatility because cash (Certificates of Deposit, T-bills, etc.) has virtually no volatility and bonds are very stable. This model would be suitable for anybody in the "A" category in the Risk Tolerance Quiz. On the other hand, the Aggressive portfolio will more likely fluctuate in value in the short term because 80% of it is invested in stocks. Even this portfolio has an element of stability built into it as the other 20% is invested in the less volatile bonds and cash categories. This portfolio mix would be appropriate for anybody in the "D" category. These examples are guidelines, not recommendations. < PREVIOUS NEXT > #40044