20% Stocks 80% Bonds -- Income Investors are either very conservative or require a significant level of income from their investments. They want low volatility and a low probability of substantial capital losses. As such, they will hold modest amounts of equities and concentrate on fixed-income investments. They will avoid high volatility but at the certain cost of substantial reduction in the long-term growth of their real wealth.

40% Stocks 60% Bonds -- Income and Growth Investors are conservative investors who place considerable value on a significant and relatively stable income stream and whose requirement for wealth enhancement is clearly secondary. These investors understand that stocks and bonds can be volatile assets; they are risk-averse and concerned with the prospect of capital losses other than for a short time period of one to two years. The income goal is natural for these investors, since quality income producing assets lessen capital loss over anything but short time periods, at the cost of a significant reduction in long-term wealth creation.

60% Stocks 40% Bonds -- Moderate Growth Investors are interested in total return and use income to reduce risk. They want to preserve the real value of their capital while achieving an income stream from it. They understand that this goal requires assuming at least a moderate risk. They realize that their portfolios can, in unfavorable markets, show losses over a one- to three-year period. However, they want portfolios in which cumulative negative total returns are unlikely over significantly longer periods.

80% Stocks 20% Bonds -- Growth Investors are total return investors who are primarily interested in capital appreciation and are willing to take visible risks to achieve their goals. Current income is clearly a secondary concern. In order to build real wealth over time, they understand they must invest in assets that potentially can - in unfavorable markets-show a capital loss over significant time periods-i.e., three to five years.

100% Stocks 0% Bonds -- All Equity Investors want to build significant wealth over time. They are usually wealthy, young, or both. They are interested in asset classes and allocations that offer the potential for high returns despite the possibility of substantial capital losses in the wrong environment. If potential rewards are high, the prospect of a capital loss stretching over a long time period, although unpleasant, is acceptable. They understand that in a particularly unfavorable environment-e.g., 1966-1982,a period of zero capital gains and high volatility in the stock market-capital losses can last over five years or longer.