Using Vanguard Investor Questionnaire to determine your asset allocation

As explained in the introduction to the Vanguard Investor Questionnaire: How you allocate your money among stocks, bonds, and short-term reserves may be the most important factor in determining the long-term return and volatility of your portfolio.

The Investor Questionnaire makes asset allocation suggestions based on your responses about your investment objectives, investing experience, time horizon, risk tolerance, and financial situation.

The following table contains sample responses for 4 different career and life phases. The second table shows allocation percentages suggested by the tool based on those responses.

#	Question	20s-40s Working	50s Working	Nearing Retirement	In retirement
1	I plan to begin taking money from my investments in . . .	More than 15 years	11-15 years	3-5 years	Less than 1 year
2	As I withdraw money from these investments, I plan to spend it over a period of . . .	More than 15 years	More than 15 years	More than 15 years	More than 15 years
3	When making a long-term investment, I plan to keep the money invested for . . .	More than 8 years	More than 8 years	More than 8 years	More than 8 years
4	From September 2008 through November 2008, stocks lost over 31%. If I owned a stock investment that lost about 31% in three months, I would . . .	Hold on to the investment and sell nothing	Hold on to the investment and sell nothing	Hold on to the investment and sell nothing	Hold on to the investment and sell nothing
5	Generally, I prefer an investment with little or no ups and downs in value, and I am willing to accept the lower returns these investments may make.	I strongly disagree	I strongly disagree	I strongly disagree	I strongly disagree
6	When the market goes down, I tend to sell some of my riskier investments and put money in safer investments.	I strongly disagree	I strongly disagree	I strongly disagree	I strongly disagree
7	Based only on a brief conversation with a friend, coworker, or relative, I would invest in a mutual fund.	I strongly disagree	I strongly disagree	I strongly disagree	I strongly disagree
8	From September 2008 through October 2008, bonds lost nearly 4%. If I owned a bond investment that lost almost 4% in two months, I would . . .	Hold on to the investment and sell nothing	Hold on to the investment and sell nothing	Hold on to the investment and sell nothing	Hold on to the investment and sell nothing
9	The chart below shows the highest one-year loss and the highest one-year gain on three different hypothetical investments of $10,000. Given the potential gain or loss in any one year, I would invest my money in . . .	Investment B (gain $1,921; loss -$1,020)	Investment B (gain $1,921; loss -$1,020)	Investment B (gain $1,921; loss -$1,020)	Investment B (gain $1,921; loss -$1,020)
10	My current and future income sources (such as salary, Social Security, pension) are . . .	Very stable	Very stable	Stable	Stable
11	When it comes to investing in stock or bond mutual funds (or individual stocks or bonds), I would describe myself as . . .	Experienced	Experienced	Experienced	Experienced

Here are allocation percentages suggested by the tool, based on the responses above:

Suggested Allocation	20s-40s Working	50s Working	Nearing Retirement	In retirement
Stocks	100%	80%	70%	60%
Bonds	0%	20%	30%	40%

Note that suggested allocation percentages above are based on the sample responses in the previous table and may be different based on the information about your specific investment objectives and experience, time horizon, risk tolerance, and financial situation. To get results that best suit your goals and needs, be honest and truthful when responding to the questions.

Related:

Vanguard Investor Questionnaire

Using Vanguard’s Portfolio Watch and Portfolio Tester for Rebalancing

Disclaimer: This article is not intended to be investment advice. Consult a duly licensed professional for investment advice. The contents of this article are for educational purposes only and do not constitute financial, accounting, tax, or legal advice. Past performance is no guarantee of future results.