Think of the Separation Property (which states that given your risk tolerance, all you need to construct the Optimal Portfolio for you is to combine the Market Portfolio (MP) (often represented by S&P 500 or Vanguard Total Stock Market Index Funds) and some Treasury Bills. Using the fact that the Market Portfolio's (MP's) standard deviation is 12% a year and its return is 11% a year do the following: Estimate your own risk tolerance (i.e. find where you are on the risk axis of the mean-variance graph) in relation to the Market Portfolio (MP) risk. Try to be as quantitative as possible about this. For example, after some introspective examination you might conclude that your risk tolerance is slightly less than that of the Market Portfolio (say, around 80% that of the MP) Build a hypothetical portfolio using only MP, treasuries, and your level of risk. (assume that return on MP is 11% per year, that of Treasuries is 2% per year and the weights invested in each will be determined by your risk tolerance) Using the number of years until your own retirement and the annual amount you plan to contribute, calculate the size of your final portfolio value at retirement using any calculator