Ray Dalio built All Weather to survive every economic environment - and it holds only 30% stocks
Most investors assume a strong portfolio means a lot of stocks. Ray Dalio's All Weather portfolio disproves that: 30% stocks, 40% long-term bonds, 15% intermediate bonds, 7.5% gold, 7.5% commodities - and it has averaged around 7.5% annually since 1984, with a maximum drawdown of roughly -21% versus -51% for the S&P 500 during 2008. The insight is that different asset classes thrive under different economic conditions: stocks in growth, bonds in deflation, gold and commodities in inflation, cash in crisis. The Asset Allocation Calculator takes this logic further: choose from six proven strategies, set your geographic focus and bond type, and get a full sub-asset class breakdown with specific ETF tickers.
How to use the Asset Allocation Calculator - step by step
- Portfolio amount ($) - total capital to allocate. For proper diversification across 7-8 sub-positions, $20,000 or more is recommended. Below that, the calculator warns you and suggests using 2-3 broad ETFs instead.
- Allocation strategy - the core choice. Classic 60/40 for balanced investors; All Weather for low volatility; Permanent Portfolio for crisis resistance; Aggressive 80/20 for long horizons; Income for dividend income; Custom if you want full control over each percentage.
- Stock region - Global (broadest), USA (largest single market), Europe+UK (suitable for EU-based investors), or Equal Split (avoids home-country bias). This determines which ETFs appear in the developed/emerging/local rows.
- Bond type - Government Treasuries for maximum safety and negative stock correlation; Government + Corporate mix for slightly higher yield; Inflation-indexed TIPS if you expect inflation to remain elevated.
- REIT - yes or no. Real estate ETFs (VNQ, IYR) add inflation protection and income. The calculator adds REIT by reducing the stock allocation proportionally.
- Currency exposure - USD-only if you want all ETFs in dollars; Mixed for partial foreign exposure via VEA/VWO; Global Unhedged for maximum currency diversification with international ETFs.
- Custom percentages - only needed for the Custom strategy. Stocks + bonds + gold + cash must sum to 100.
- Read the output - allocation bar, sub-asset class table with dollar amounts and ETF tickers, warnings for conflicting choices, and a rebalancing plan tailored to your strategy.
The 6 strategies compared - reference table
Approximate top-level allocations before REIT adjustment. Sub-asset class splits depend on region and bond type selections.
| Strategy |
Stocks |
Bonds |
Gold |
Cash |
Best for |
| Classic 60/40 |
60% |
30% |
5% |
5% |
Balanced investors, 7-20 year horizon |
| All Weather |
30% |
55% |
7% |
3% |
Low volatility, any economic environment |
| Permanent Portfolio |
25% |
25% |
25% |
25% |
Crisis resistance, capital preservation |
| Aggressive Growth 80/20 |
80% |
10% |
5% |
5% |
10+ year horizon, high drawdown tolerance |
| Income/Dividend |
40% |
40% |
5% |
15% |
Regular passive income, near-retirement |
| Custom |
user |
user |
user |
user |
Full control - must sum to 100% |
5 practical examples with specific numbers
Example 1 - $100,000, Classic 60/40, Global, Government Bonds, no REIT: Developed Market Stocks (42%) $42,000 in VEA/URTH; Emerging Markets (12%) $12,000 in VWO; Global Stocks (6%) $6,000 in VT; Government Bonds (30%) $30,000 in TLT/IEF; Gold (5%) $5,000 in GLD; Cash (5%) $5,000 in SPAXX. Rebalance annually when any class drifts 5 points.
Example 2 - $50,000, All Weather, USA, TIPS, no REIT: US Total Market Stocks (25.5%) $12,750 in VTI; US Developed (4.5%) $2,250 in VOO; Emerging (1.5%) $750 in VWO; Government Bonds (33%) $16,500 in TLT; TIPS (22%) $11,000 in TIP; Gold (7%) $3,500 in IAU; Cash (3%) $1,500 in VMFXX. Low volatility - designed to avoid large drawdowns.
Example 3 - $250,000, Income/Dividend, Global, Government + Corporate Mix, with REIT: Developed Stocks (23.5%) $58,750 in VEA with dividend tilt; Emerging (6.7%) $16,750 in VWO; Global (3.3%) $8,250 in VT; Government Bonds (24%) $60,000 in IEF; Corporate Bonds (12%) $30,000 in LQD; TIPS (4%) $10,000 in TIP; Gold (5%) $12,500 in GLD; REIT (10%) $25,000 in VNQ; Cash (11.5%) $28,750. Estimated annual income at 3.5% average yield: approximately $8,750/year.
Example 4 - $30,000, Permanent Portfolio, Europe+UK, Government Bonds, no REIT: Each quadrant at 25%: European Stocks (18.75%) $5,625 in IEUR; European Broad (3.75%) $1,125 in FEZ; Emerging (2.5%) $750 in EEM; Government Bonds (25%) $7,500 in GOVT; Gold (25%) $7,500 in IAU; Cash (25%) $7,500 in BIL. Warning: at $30,000 this is near the minimum for 7 sub-positions.
Example 5 - $500,000, Aggressive Growth 80/20, Equal Split, Government Bonds, with REIT: Equal stock thirds with REIT adjustment: US Stocks (23%) $115,000 in VTI; Developed ex-US (22.7%) $113,500 in VEA; Emerging (13.3%) $66,500 in VWO; Government Bonds (10%) $50,000 in TLT; Gold (5%) $25,000 in GLD; REIT (7%) $35,000 in VNQ; Cash (4%) $20,000 in VMFXX. Historical Aggressive 80/20 CAGR: approximately 8-9%. Expected max drawdown: -35% to -45%.
FAQ - Frequently asked questions
What is the difference between All Weather and Permanent Portfolio?
Both aim for resilience across economic environments but use different logic. All Weather (Ray Dalio, Bridgewater) weights assets by their risk contribution: bonds get a large allocation because they are less volatile than stocks, so you need more of them to match risk. The result is 30% stocks, 55% bonds, 7.5% gold, 7.5% commodities. Permanent Portfolio (Harry Browne) uses equal 25% weights across stocks, long-term bonds, gold and cash - one asset for each of the four economic environments (growth, recession, inflation, deflation). All Weather has historically produced slightly higher returns; Permanent Portfolio has lower maximum drawdowns. All Weather uses commodities; Permanent Portfolio does not.
Should I choose TIPS or regular government bonds?
TIPS (Treasury Inflation-Protected Securities) adjust their principal with the Consumer Price Index - if inflation runs at 5%, your TIPS principal grows 5%. This makes TIPS superior when inflation is above expectations. Regular nominal Treasuries (TLT, IEF) tend to perform better in deflationary environments and during equity market crashes because investors flee to their fixed coupons. The classic All Weather and Permanent Portfolio use nominal long-term Treasuries specifically for their deflation hedge. Choose TIPS if your primary concern is inflation eating your purchasing power; choose Treasuries if you want maximum crisis protection or deflation hedging.
Why does the calculator warn me about small portfolios under $20,000?
The warning is about practical efficiency, not strategy validity. With $15,000 split across 8 sub-positions, each lot averages $1,875. Many brokers charge minimum commissions that make tiny lots expensive in percentage terms. More importantly, when one position earns dividends or needs rebalancing, the absolute dollar amounts are too small to reinvest efficiently. Below $20,000, consider using 2-3 broad funds instead: VT (global stocks, all regions) + BND (US bonds, all types) + GLD (gold). You get 95% of the diversification with 3 ETFs. Above $20,000-$30,000, the sub-class breakdown becomes cost-effective.
How does the REIT allocation work in the calculator?
When you select Yes for REIT, the calculator adds a real estate tranche by reducing the stock allocation. The REIT bonus varies by strategy: Classic 60/40 adds 5% REIT (reducing stocks from 60% to 55%); Aggressive Growth adds 7% (reducing from 80% to 73%); Income adds 10% (reducing from 40% to 30%). Permanent Portfolio has no REIT bonus - Harry Browne's formula is specifically four equal quadrants with no real estate. REITs recommended ETFs: VNQ (Vanguard Real Estate, 0.12% expense ratio), IYR (iShares US Real Estate), SCHH (Schwab US REIT). Note that REITs correlate with stocks during crises, so they do not add crisis-time diversification.
What does currency exposure setting actually change?
The currency exposure setting changes the explanatory note and instrument suggestions, not the percentage allocations. USD-denominated means using ETFs like VOO (priced in dollars) - even VEA and VWO trade on US exchanges in USD, though the underlying stocks are in foreign currencies. Mixed means you also hold some ETFs on their home exchanges or accept the foreign currency return on VEA/VWO without hedging. Global unhedged means deliberately choosing instruments without currency hedging to gain exposure to EUR, GBP, JPY, etc. movements. For most US-based investors, USD-denominated ETFs (VOO, VEA, VWO) already provide adequate global diversification since VEA tracks stocks in 24 developed non-US markets.
How is this different from the Investment Portfolio Calculator?
They answer different questions. The Investment Portfolio Calculator asks "what is my risk profile and investment goal?" and outputs a top-level allocation (stocks/bonds/commodities/cash percentages) based on your risk tolerance, time horizon and experience. The Asset Allocation Calculator (this tool) asks "which specific strategy do I want to implement?" and outputs sub-asset class splits with specific ETF tickers for developed stocks, emerging stocks, government bonds, corporate bonds, gold, REIT and cash. Use the Investment Portfolio Calculator first if you are unsure what risk level suits you, then use this tool to translate that into a concrete strategy with named ETFs.
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