This page focuses on a three-account allocation strategy with FarPlanner. As mentioned on our overall allocation page, this is our recommended strategy since safety and risk are better balanced versus other options. As usual, please run any allocation approaches past your qualified financial and tax planning experts.
The first account for this strategy should be a separate cash type (e.g., checking, savings, settlement brokerage) for each account group (e.g., 401k, IRA). This is the ‘safe’ zero-ish-APR account that FarPlanner stages funds to that need to be paid or transferred immediately in your plan.
This strategy’s second account in each account group should be a relatively-safe above-zero-APR investment, such as a bond fund such as Vanguard’s BND ETF.
This strategy’s third account in each account group should be in a stock-market fund ETF with many different stocks, such as Vanguard’s VTI ETF.
A final decision is what percentage allocations to use with these 3 accounts, based on when you need funds by. Here’s one example allocation approach you could use in FarPlanner:
| Account | Up to 6 months | Up to 1 year | 2 years | 4 years | 7 years | 15 years | 25 years | Beyond 25 years |
| Stock fund | 20% | 80% | 85% | 90% | 95% | |||
| Bond fund | 20% | 50% | 80% | 20% | 15% | 10% | 5% | |
| Cash | 100% | 80% | 50% |
Note the blending of allocations across the accounts for a given future need time, and increasing allocation towards stocks for needs further into the future. Note as well keeping bonds in the mix as they tend to move up in down differently than stocks. Hence if the stock fund drops/rises in price, and bond fund rises/drops, you could use FarPlanner to allocate from/to bonds to/from stocks to keep the same percentage allocation.