Portfolio

Money due in two years and money due in 25 face different risks; 98 years of data show how much. A time horizon is the date a dollar will be spent, and that date, more than age alone, decides how much stock-market swing a portfolio can absorb. Starting from the SEC and FINRA definitions, the guide compares US stock and 10-year Treasury returns from 1928 to 2025 over rolling 1- to 20-year windows: how often each lost money, and how often stocks came out ahead. A hypothetical $600,000 bucket example tests seven years of withdrawals against the worst seven-year stretch in that data, and a dated timeline follows one goal from the long band to the short one. The FAQ explains what the Roth IRA age 59½ rule does and does not mean for a horizon.

A 9% average return can pay less per unit of risk than 7%. Raw return says how much an investment gained, while risk-adjusted return asks how much uncertainty came with that gain. This guide defines both, writes out the Sharpe ratio and the Sortino ratio as formulas, and touches briefly on Treynor, alpha and maximum drawdown. A clearly labeled hypothetical example with ten years of made-up annual returns shows how a portfolio with the higher average can score less than half as well per unit of risk, and why borrowing changes the return but not, at the risk-free rate, the ratio. It closes with the limits of these ratios and a short checklist for reading any fund's numbers.

In 2008 a 40% Treasury sleeve cut a 36.6% stock loss to 13.9%; in 2022 the same sleeve saved 0.1 point. This guide works through the worst S&P 500 years from 1928 to 2025, including 1931, 1937, 1974, 2001–2002, 2008 and 2022, and shows what T-bills, 10-year Treasuries and Baa corporate bonds returned in each. A simple formula turns those numbers into 100/0, 80/20 and 60/40 portfolio results. Index returns from fund documents compare short, intermediate and long Treasuries, investment-grade corporates and high yield in 2008 and 2022, plus TIPS in 2022. A 2007–2012 example shows how rebalancing back into stocks after the crash changed the ending balance, and 98 years of data put a number on what the cushion cost.

Five asset classes took turns leading from 2000 to 2025, while the Nasdaq and bitcoin each fell over 76%. The case for a mix rests on what can be known in advance, not on hindsight. Bessembinder's study of US stocks since 1926 found that about 4% of companies account for all net wealth creation, while most individual stocks trailed Treasury bills over their lives. A test of stocks, Treasuries, corporate bonds, T-bills and gold shows that a rule buying last year's leader actually earned more than an equal-weight mix, with about twice the mix's worst-year loss. It also covers Nasdaq and bitcoin drawdowns, Enron's 401(k), the federal right to sell employer stock in a plan, and a five-step concentration check.

Rebalancing resets a drifted portfolio to its target mix, and the method you pick decides the cost. A portfolio that starts at 60% stocks does not stay there: unequal returns push the weights apart, and the risk level moves with them. This guide shows how drift happens with a $100,000 worked example, compares calendar, threshold and hybrid rules, and explains how new money, dividends and account choice can cut the number of taxable sales. It also runs a 60/40 mix through 2000-2025 annual data, never rebalanced against yearly and 5-point-band rebalancing, to show what rebalancing changed in risk and return.

Asset allocation shapes how investment portfolios behave over time. This topic explores how dividing capital among stocks, bonds, cash, and alternatives truly affects returns, risks, and investor outcomes. Designed for serious investors and portfolio managers, it clarifies common misconceptions and pinpoints how allocation choices determine performance dynamics and risk exposure in measurable terms.

Age rules put a 45-year-old anywhere from 55% to 75% in stocks, so age alone cannot settle the mix. The method here starts from four inputs regulators and researchers name: each goal's time horizon, the return the goal needs, the loss a household can absorb (including the bond-like value of wages, pensions and Social Security) and the loss it is willing to sit through. It shows what the 100-, 110- and 120-minus-age rules give at 30, 50 and 70, how three published target-date glide paths differ, and how three goals with different dates add up to one household mix. Worst calendar years since 1928 are turned into dollars on $200,000, and the last step is a written target with ranges and review triggers.

Stock-bond correlation ran from -0.86 to +0.74 across 10-year windows since 1928. That range matters for portfolio risk. Correlation measures how two assets' returns move together, and with the weights and volatilities it sets how much diversification a mix delivers. This guide defines it, shows how window length changes the number, tracks US stocks against 10-year Treasuries decade by decade from annual data, and works a 60/40 example in which portfolio volatility climbs from 9.2% to 11.2% as correlation rises from -0.3 to +0.6. It closes with a checklist for reading correlation figures without over-trusting them.

A two-asset example shows how correlation sets portfolio risk, and why optimized weights prove fragile. The guide works through hypothetical numbers: portfolio return and volatility at several weights, the closed-form minimum-variance mix, what happens when correlation rises from 0.2 to 0.8, and a tangency portfolio for a stated risk-free rate. It then explains the efficient frontier and capital market line, and the limits that matter: noisy expected-return estimates, unstable weights, non-normal returns and correlations that climb in bear markets. It also covers weight caps, covariance shrinkage, risk parity and equal weighting, plus a short checklist.

A harvested loss offsets gains and up to $3,000 of income, but it mostly defers tax rather than erasing it. Tax-loss harvesting means selling an investment below its cost in a taxable account so the loss reduces the year's tax bill. This guide walks through how losses are netted, what a $5,000 loss is worth at different 2026 tax rates, how the 30-day wash-sale rule postpones the deduction (and when an IRA purchase loses it for good), and why a lower cost basis creates a larger gain later. Three illustrative examples show the arithmetic, and a short section covers fund swaps, direct indexing and crypto, including the status of a House bill that would bring digital assets under the wash-sale rule.