100-Age Rule | Asset Allocation Rule
The ‘100 minus your age’ rule is another asset allocation rule. 100 minus your age gives you the percentage in equities with the balance going into low-risk bond assets.
For example, At age 30 you need 70% equity and 30% bonds. For age 50, equity comes out at 50% and bonds 50%.
The idea is that as you get older you move out of equities and into lower risk bonds. Advisors call this de-risking or life styling. Received wisdom is that in later life having a high proportion of equities creates a hazard to income, if the short term value of the portfolio suddenly moves up or down in value as a fund can’t recover.
100-Age Rule | Asset Allocation RuleThe ‘100 minus your age’ rule is another asset allocation rule. 100 minus your age gives you the percent