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Portfolio a alokace

Portfolio by Risk Profile: Three Concrete Models

6 min readCompound

Key takeaways

An investor's risk profile tells you how much short-term loss you are willing to accept in exchange for a higher long-term return — and the entire portfolio allocation follows from that.

How to determine your own risk profile

Two key questions:

Brokers and banks usually have standardised questionnaires. Their result is only indicative, but helpful as a starting point.

Model 1: Conservative portfolio (30/70)

Composition: ~30% equity ETF, ~70% bonds / money market funds. Suitable for horizons up to 5 years or investors with low tolerance for swings. Maximum historical drawdown for a similar mix is around 15–20%. Return is lower but more predictable.

Model 2: Balanced portfolio (60/40)

Composition: ~60% equities, ~40% bonds. The classic model with decades of history. Historical maximum drawdown is around 30%. Suitable for 7–15 year horizons and investors who want growth but cannot tolerate extreme volatility.

Note: in environments of higher inflation and interest rates, the bond component can also fall significantly. The 60/40 does not guarantee stability under all circumstances.

Model 3: Dynamic portfolio (90/10 or 100/0)

Composition: 90–100% equities globally, the remainder in cash or short-term bonds. For investors with a horizon of 15+ years and the ability to withstand a 40–50% drawdown without panicking. Historically the highest average return, but also the highest volatility. See what is the S&P 500 as an example of the equity component.

How to combine models

Different models may fit different goals at the same time: a dynamic portfolio for retirement in 25 years and a conservative one for a home purchase in 4 years. Build "buckets" separately. How allocation changes as the goal approaches is explained in the article on glide path.

FAQ

What is an investor's risk profile?

A combination of financial capacity (how long you do not need the money) and psychological tolerance (how much a portfolio decline stresses you). It influences how much of the portfolio to put in volatile assets (equities) versus more stable ones (bonds, cash).

Is the 60/40 model still valid?

The 60/40 model was a reference point for decades, but in periods of higher inflation or correlated declines in both equities and bonds it can surprise negatively. It remains a reasonable starting point for investors with a medium risk profile.

Can a young investor have a conservative portfolio?

Yes — if their goal is short-term (a flat purchase in 3 years) or they genuinely have low psychological tolerance. Age alone is not the only criterion. The horizon of the specific goal and whether a decline would trigger selling matter more.

How to build a dynamic portfolio as simply as possible?

One global equity ETF (All World or S&P 500) makes up 90–100% of the portfolio. Add a short-term bond or money market ETF as a buffer. A three-component version? Add a thematic or dividend ETF. Fewer components means simpler rebalancing.

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