 | Using the 110 figure, the stocks vs. bonds calculation is done as such:The older you are, the more bonds you are supposed to hold in your portfolio. The younger you are, the more stocks you are supposed to hold in your portfolio. This is because bonds exhibit more price stability over time whereas stock prices are more volatile, though stocks generally have a higher CAGR (compound annual growth rate) than bonds, with dividends included. For example, from 1871 2011, the CAGR of the S 500, with dividends included, was . Treasury notes do not appear to have yielded more than since 10/11/90. is viewed as extremely unlikely to default on these notes, so very little adjustment is made to the yield to accommodate for potential loss of principal in figuring average expected total return. |