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How do I Account for Asset Allocation and Rate of Return Assumptions?

This article describes the Planner's rate of return model

Nancy Gates avatar
Written by Nancy Gates
Updated over a week ago

Boldin’s modeling and analysis does not depend upon how each individual holding performs. We do not yet capture cost basis, allocations, or transactions and you will need to make those entries yourself to ensure that your plan is accurate. You have the ability to model your asset allocation (which is the percentage of equities and fixed income you have in each account) by selecting a rates of return for each account.

Understanding the rate of return assumptions

Your rates for inflation, appreciation, COLA and returns on your accounts play an important role in shaping your long-term financial outlook.

You have multiple options for setting your rate assumptions. You can:

  • Apply one of Boldin’s historically-derived default rates

  • Set a custom average or optimistic/pessimistic rate

NOTE: Rates of return should be entered as nominal rates. This means you do not adjust the rate for inflation.

Applying Boldin’s default rates

Boldin's default return rates are based on historical data and assume the following stock-to-bond allocations for each risk profile:

Stock

Bonds

Nominal Return

Aggressive

90.00%

10.00%

10.25%

Moderately Aggressive

70.00%

30.00%

8.80%

Moderate

60.00%

40.00%

8.08% (default)

Moderately Conservative

40.00%

60.00%

6.64%

Conservative

30.00%

70.00%

5.92%

Checking

0.00%

Savings

2.00%

Indices

Period

Nominal Return

S&P 500

1994 - 2024

10.97%

10 Year US Treasury Bond

1994 - 2024

3.75%

Setting custom rates

If you have a specific assumption you'd like to use, custom rates let you enter your own average rate, or your own optimistic and pessimistic rates.

When you enter your own average rate, we'll automatically generate an optimistic rate (20% higher) and pessimistic rate (20% lower) for you.

For example, if you enter a 6% average rate, we'll calculate a 7.2% optimistic rate (6% × 1.2) and a 4.8% pessimistic rate (6% × 0.8).

When you enter your own optimistic and pessimistic rates, we'll automatically infer the average rate. For example, if you enter a 8% optimistic rate and a 4% pessimistic rate, then 6% will be the assumed average rate.

How do return assumptions impact your projections?

Your return assumptions play a key role in shaping your long-term financial outlook. Specifically, the rate of return determines how your savings balances are projected to grow.

We use two types of modeling:

  • Linear projections apply a consistent rate of return over time to provide a straightforward view of how your balances might grow.

  • Monte Carlo simulations incorporate both the rate of return and the standard deviation for each account to simulate thousands of possible market outcomes. This creates a range of potential outcomes and forms the basis for your Chance of Success score.

Notes:

The rates on our model portfolios are based on historical returns from 1994-2024 for 2 asset classes: S&P 500 and US 10 year Treasury Bonds. Past performance does not guarantee future returns. If you feel that the next 30 years might provide returns which are lower than historical averages, you may want to select a more conservative model for the future.

Morningstar’s Forecast Stock and Bond Returns

Vanguard’s Market Perspectives

Vanguard Capital Markets Vanguard Capital Markets Model® forecasts

J.P. Morgan Asset Management's 2025 Long-Term Capital Market Assumptions:

Goldman Sachs' Market Projections

BNY 2025 Market Outlook: Navigating a new landscape

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