As part of a small project to put together some investment resources for friends who ask for general investment advice, I had a play with the Sorted investment planner.

I really like the concept - 9 simple questions will sort the user into an investment category and tell them what sort of asset allocation they should have. It is well written, nicely displayed and easy to read.

However, I did have some concerns in regard the quality of advice - i.e. while I thought I was answering the questions from a conservative, but pragmatic investment viewpoint and gave a 4-9 year time horizon, the calculator decided I was a "growth" investor and told me I needed to invest for minimum of 9-12 years.

The asset allocation it suggested for a "growth" investor was 60% shares, 26% bonds, 10% property and 4% cash. It then stated that the likely range of returns was -5.5% to +22.5%, with an expected loss one year in six. This is where I cringe a little at the thought of my inexperienced friends putting 60% into shares and 26% into bonds. While the one in six down years might be correct, I doubt very much that falls in a portfolio of that composition would max out at -5.5% in one year - I would have thought at least -15%, if not -25% for a portfolio of that composition would represent the possible damage.

Finally, I found the graphical returns amusing - after suggesting I invest for 9-12 years, the graph then shows some theoretical outcomes (maybe these are randomly generated each time, so may vary with users?) where the growth investor is still below their entry value for the first 12-15 years and only doubles their money after 25 years - a return of 2.8% pa. Well at least that wouldn't get hopes up too much!

Overall, I find the various asset allocations are determined far too much by the approach of a professional fund manager rather than by the needs of the amateur investor (who are the clients for "Sorted"). The largest allocation to "cash" (term deposits) is 10% in the defensive portfolio, along with 70% in bonds and 14% in shares. My personal view is that the truly defensive investor who is self-managing and wants minimum hassle will probably have a more comfortable ride in rolling/staggered term deposits than trying to figure out the relative merits of various bonds and shares. They could certainly still expect to make at least the 1.5%pa compound returns that the graph suggests over 25 years. (I can't help wondering if the graphs are inflation adjusted, as well as net of fees and tax?)