This free portfolio stress-tester simulates how your investment mix would behave under adverse macroeconomic conditions — a change in interest rates and a shift in inflation. Set your allocation across equities, bonds, gold, and cash, then turn the macro dials to see your expected return, volatility, Sharpe ratio, and an estimated stress drawdown update in real time. All modelling happens locally in your browser; no portfolio data is transmitted.
Each asset has a measured sensitivity (beta) to interest rates and to inflation. When you apply a shock, the tool adjusts every asset’s expected return by its betas, then recomputes portfolio risk using a stressed correlation matrix. The core relationship is:
R_stressed = R_base + (β_rate × Δrate) + (β_inflation × Δinflation)
The default asset sensitivities capture how real markets behave:
| Asset | Rate beta (β_r) | Inflation beta (β_i) |
|---|---|---|
| US Equities | −0.3 | −0.2 |
| Long-Term Bonds | −0.8 | −0.5 |
| Gold | −0.1 | +0.6 |
| Cash | +0.8 | −0.9 |
Long-term bonds have the most negative rate beta, so they suffer most when rates rise. Cash benefits from higher rates, and gold is the one asset that tends to help against inflation.
In a calm market, assets that move independently give you genuine diversification. In a crisis, they start falling together — correlations rush toward 1.0 and diversification stops protecting you. That is exactly what broke the classic 60% stock / 40% bond portfolio in 2022, when rapid rate hikes and high inflation hit both halves at once. To replay it: set a 60/40 allocation, push the rate dial up 2–3% and inflation up 2%, and watch the drawdown expand. The model raises all correlations in proportion to the size of the shock:
ρ_stressed = ρ_base + (1 − ρ_base) × Stress Factor
The Sharpe ratio measures return per unit of risk: (portfolio return − risk-free rate) ÷ volatility. Above 1.0 is generally considered good and above 2.0 excellent; below 0.5 means you are taking a lot of risk for little extra return over cash, and below 0 means you expect to underperform cash on a risk-adjusted basis. Apply a large combined shock and watch the Sharpe ratio collapse in real time.
Take a 60/40 stock/bond portfolio at baseline. Apply a +2% rate shock and a +2% inflation shock. Equities lose about 0.3×2 + 0.2×2 = 1.0% of expected return; long bonds lose about 0.8×2 + 0.5×2 = 2.6%. Because the shock also pushes correlations up, volatility rises and the Sharpe ratio falls further than the return change alone would suggest — the mathematical signature of a real crisis, and the reason a portfolio that looks safe in calm markets can still deliver a painful drawdown.
Is the 60/40 portfolio still reliable? It struggled badly in 2022 when rates and inflation rose together. Use the dials to see how it holds up under different shocks and whether adding gold or cash improves its resilience.
What is the stress drawdown estimate? A fast heuristic — 1.5 × the stressed volatility — approximating a plausible bad-quarter move under your scenario. It is an educational estimate, not a formal Value-at-Risk.
Is my portfolio data private? Yes. Everything runs in your browser; your allocation and results are never sent to a server.
Learn the full method in How to Stress-Test Your Portfolio.
This tool is Step 7 of our master guide — The DIY Financial Plan: From First Dollar to Financial Independence.
Explore our other tools — Retirement Calculator, FIRE Calculator, and Mortgage Calculator. WealthDeck provides educational tools only, not financial advice — see our Terms & Disclaimer.