In my example of what a diversified portfolio looks like, I used a 70% Stock portfolio as an illustration. To save you the time and math, I’ve started a series of posts that look at a range of diversified portfolios from 100% Stock to 0% Stock. I’ll break these portfolios down in 10% increments. Today we’ll take a closer look at a 20% Stock portfolio.

Here’s a pie chart depicting the asset allocation for a diversified 20% Stock portfolio:

**Click here to learn how to invest in a diversified 20% Stock portfolio**. Keep in mind that you’ll need $188,000 to meet the fund minimums for this particular portfolio. If you invest at Vanguard, the total expense ratio for this portfolio would be 0.20%.

Here’s a chart showing the historical returns for this portfolio from 1927-2007:

Now for some quick facts about this 20% Stock portfolio:

- The highest calendar year return for this portfolio was 20.8% in 1933.
- The lowest calendar year return for this portfolio was -10.5% in 1931.
- From 1927 to 2007, the average annual return for a diversified 20% Stock portfolio was 6.7%.
- During any consecutive 3 years from 1927 to 2007, this portfolio lost money 3 times out of a possible 79 periods. In 1 of those 3 times, it lost less than 0.6% of its original value.
- The two worst 3 year periods were 1929-1931 and 1930-1932 (Great Depression), when the portfolio lost about 12% of its original value.
- During any consecutive 5 years from 1927 to 2007, this portfolio lost money only once out of a possible 77 periods. Even then, it lost less than 1.8% of its original value.
- This 20% Stock portfolio
**never lost money**during any consecutive 7 year period from 1927 to 2007. - This portfolio
**never averaged less than a 4.2% annual return**during any consecutive 30 year period from 1927 to 2007.

My hope is that this information will prepare you for the possible risk of investing in a 20% Stock portfolio while giving you some perspective during tough times. I think it’s really important to emphasize that last quick fact. If you have a time horizon of 30+ years, there is no historical period where you would have averaged less than a 4.2% annual return. (Even if you started just before the Great Depression!!!) Take comfort in that fact when the media barrages you with doom and gloom news every day.