From 1926 to 2017, if you allocated your funds in 60% Stock and 40% Bond, you will earned 8.8% average annual return.
Vanguard has an excellent page showing several asset allocation model’s risk and returns here.
Age based asset allocation is a smart way to be more efficient. To determine the percentage of stocks in your portfolio, use the following formula:
100 – your current age = % stock
Let’s say you are 40, that would be 60% Stock and 40% Bond.
Now, if you don’t want to deal with allocation and rebalancing, I would simply pick a target retirement date funds such as Vanguard Target Retirement Fund, also known as Life Cycle Funds. The fund automatically adjust the stock percentage as you age.
- Use Vanguard Target Retirement Fund or other Life Cycle Funds for all your accounts. (No effort).
- Or use an age based asset allocation and pick your own funds. (Some effort + possible more gain)