Educational information, not individual financial advice.
Key Takeaways
Most allocation frameworks use three labels: aggressive, moderate, conservative. These are shorthand for three ranges of stock/bond mix that trade off return for volatility.
Aggressive — 80–100% stocks, 0–20% bonds and cash.
Moderate — 50–70% stocks, 30–50% bonds and cash.
Conservative — 20–40% stocks, 60–80% bonds and cash.
Cash / money market — near-zero nominal volatility, but guaranteed to lose purchasing power to inflation over time.
The question isn't "which is best." It's "which matches my situation." Three inputs:
Time horizon. How long until you need to spend from this portfolio? A 25-year-old saving for retirement has a 40-year horizon and should be aggressive. A 65-year-old retiree has a 30-year horizon but is spending from the portfolio every year; moderate is usually more appropriate.
Risk tolerance. Can you hold through a −40% year? Or will you panic-sell? Aggressive only works if you actually hold it. A moderate portfolio you keep beats an aggressive one you abandon at the bottom.
Ability to earn and save. If your income is strong and you're still saving, you can ride out volatility more easily — new savings effectively buy at depressed prices during downturns. If your income has stopped, that buffer is gone.
Portfolios don't have to be one strategy. Common patterns:
Two-bucket approach. A "stable" bucket (2–5 years of expenses in conservative/cash) plus a "growth" bucket (the rest in aggressive/moderate). You spend from the stable bucket in down markets and refill it from the growth bucket in up markets. Reduces the chance of selling stocks low.
Account-specific allocation. Your retirement account can be aggressive (long horizon) while your emergency fund is cash (short horizon). Combined allocation might look moderate even though individual accounts are not.
Goal-based allocation. A house down payment in 3 years should be conservative; retirement in 30 years should be aggressive. The same person can hold both appropriately at once.
Whatever strategy you pick, the key is holding it through market cycles. Changing strategies in response to market news — going aggressive after a rally, going conservative after a crash — is the most common way retail investors underperform. The strategy you stay in beats the one you try to time.
Each asset in Horizons has a strategy field. Your allocation schedule can transition assets between strategies at milestones (e.g., "switch my 401(k) from aggressive to moderate at age 60, to conservative at age 72"). The engine applies the appropriate monthly return and volatility based on the current strategy.
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