Summary
In Episode 12 of the Plain English Finance Podcast, Tré and Sierra break down one of the most misunderstood parts of investing: asset allocation. It’s not about picking the hottest stock or guessing what the markets will do next month. It’s about how you balance stocks and bonds to build a portfolio that actually gets you where you want to go — while making decisions you’ll be happy with as your knowledge grows.
What Asset Allocation Really Means
Most people confuse allocation with location.
Location is where you hold investments — TFSA, RRSP, corporation.
Allocation is what’s inside — how much is in equities vs. fixed income.
Your mix between stocks and bonds determines two things:
- Your experience — how bumpy the ride feels.
- Your outcome — how much you actually end up with.
A 60/40 portfolio might feel “safe,” but that safety can come at a cost. Historically, the more bonds, the lower the long-term returns, and this often increases the risk of running out of money.
What the Research Shows
A paper titled “Beyond the Status Quo” looked at this question in detail.
It compared how different portfolio mixes — all-equity, balanced, and target-date — performed over decades.
The results were striking:
- 100% equity portfolios had the lowest chance of financial ruin over time.
- Target-date funds (where you add more bonds as you age) had the highest risk of running out of money — over 60% in high inflationary environments. Yet this is the most common advice.
It’s a reminder that “lower risk” on paper doesn’t always mean safer in real life.
The Human Factor
Of course, math isn’t everything.
Markets drop. Humans panic. That’s why emotional risk is just as real as market risk.
Tré’s take:
“Mathematically, 100% equity makes sense. But emotionally, not everyone can handle it. But education plays a huge role in comfort. Quantary to popular belief, I think you should start high and dial back if you can’t handle the ups and downs— not the other way around.”
Takeaway
If you’re new to investing, start with understanding your timeframe and capacity for risk, not your fear level.
Money you need in the next three years shouldn’t be in stocks. But money you won’t touch for 15 years should be. Keeping it in cash is the real risk.
The key:
Pick your allocation based on when you’ll spend, not how you feel today.