How do we determine the evolution of the allocation?

The proportion of stocks and bonds in your portfolio (ie the allocation) determines the level of risk in your portfolio, which is the percentage of temporary loss you are exposed to.

In general, the further away you are from the maturity of your investment, the more risk you can take. Following the same logic, the closer the maturity, the less risk you have to take.

Since stocks are riskier than bonds, you can increase the risk of your portfolio by increasing the allocation to equities. According to the same principle, you should take proportionally more obligations to reduce the risk of your portfolio.

Remember that risk and return are deeply linked. To get more returns over the long term, you have to be ready to take more risks and face a higher temporary potential loss in the short term.

The tricky part of planning an investment is determining the optimal weight of stocks and bonds and the evolution of such allocation over time. These two elements depend directly on your investment objective. Do you save for a major purchase? To prepare your retirement? To generate an income? Without a particular purpose?

Depending on your investment goal, we recommend different ways to adjust your allocation. This evolution can be traced in a graph called "glide path", on which the progressive decrease of stocks weight evokes the landing trajectory of an airplane.

It is important to note that the allocation recommendations given below are of a general nature and may not be appropriate for all investor profiles. Only a detailed analysis of your profile during a conversation with one of our private advisors following this simulation will validate or adapt these general recommendations.

General investing

If you have no other goal than to grow your capital, you can consider keeping your level of risk constant over time. In this case, the recommended level of risk will depend primarily on your investment horizon, your age, and the level of temporary loss you consider acceptable.

Retirement planning

When you are more than 20 years away from retirement, we recommend that you choose a portfolio easyvest 9/10, containing approximately 90% equities. As you get closer to retirement, we recommend to gradually reducing your exposure to equities to reach a portfolio 6/10 with approximately 60% equities when you retire. During your retirement, due to the need to generate a stable income on your capital, we recommend continuing reducing the risk until 15 years after your retirement to reach a portfolio 3/10, made up of about 30% of stocks.

Income generation

In the context of income generation, the risk management logic is the same as that applied during the retirement phase of the retirement planning. It is appropriate to start with a portfolio 6/10 at the time of retirement and progressively move to a 3/10 portfolio over the next 15 years.

It should be noted, however, that if your wealth is important, if the expected income is less than 1% of your total assets, or if you invest in a transgenerational perspective (ie your investment horizon is not limited by your life expectancy), it may be appropriate to opt for a riskier portfolio and a constant allocation over time.

Major purchase

For a major purchase, the optimal level of risk declines rapidly as the purchase maturity approaches. Indeed, a 10/10 portfolio of 100% equities exposes you to a potential temporary loss of 30% of the value of your portfolio. In case of stock market crash the day before the planned major purchase, the liquidation value of your portfolio may no longer be sufficient to cover your acquisition cost. However, such a loss of value is less of a concern if your purchase is scheduled in 10 years because your portfolio will have plenty of time to recover.

As a rule of thumb, we recommend one year before your purchase to opt for a portfolio 1/10; two years before, for a portfolio 2/10; three years before, for a portfolio 3/10; And so on…