Optimal Finance Daily · Sunday, August 30, 2026
In a hypothetical example from a financial planning course, Steve Pavlina illustrates asset allocation by comparing his $100,000 investment yielding 7% annually over 25 years with Aaron's diversified strategy. Aaron split her investment into five vehicles, with two performing poorly (losing money or earning 0%), one at 5%, and two at 10% and 12%, resulting in a higher total return than Pavlina's conservative approach.
“My 7% investment turns that $100,000 into $572,542 after 25 years.”
“Aaron's grand total is $706,741. That's $134,200 more than what my 7% investment earned.”
“It's interesting that 40% of her initial investments returns zero or negative returns. And another 20% underperformed my 7% return. But those higher returns of 10% and 12% really pay off.”