For a client with moderate risk tolerance, which starting asset allocation is commonly considered?

• A. 80/20 equities to fixed income.
• B. 60/40 or 50/50 equities to fixed income.
• C. 20/80.
• D. 100% cash.

Answer: (B)

Balancing growth potential with a comfortable level of volatility is what this risk level is about. Equities can lift long‑term returns but come with bigger swings, while fixed income tends to be steadier and helps dampen those swings. A portfolio that mixes these two in roughly equal weight gives you a reasonable chance to grow over time while keeping risk in check. It’s a common starting point for moderate risk because it captures some upside from stocks without letting volatility get out of hand. If you leaned heavily toward stocks, the plan would become more aggressive; if you leaned toward cash or bonds, you’d dampen growth too much and could fall behind inflation. So a balanced allocation between growth and stability is typically the best fit for moderate risk.