Stress test your portfolio in seconds

13 min Read Published: 22 Aug 2018

UPDATE AUGUST 2018: I have now updated the asset allocation tool to take into account two new scenarios which occurred in 2018, as described at the foot of this article

Investors, be they professional or DIY investors, don't give enough consideration to the downside potential of their portfolios. When engineers build a new skyscraper they don't just focus on reaching for the stars. In fact they pay more attention to the structure's ability to remain upright. How will the structure cope in high winds or an earthquake? How much weight can it hold per square inch? This stress testing of materials and construction ultimately lays the foundation for the success of the project.

Building an investment portfolio shouldn't be any different. The trouble is that investors are always aiming for the stars and pay less attention to what will happen in times of market stress.

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