How do you allocate assets to a portfolio based on age?

Others include time horizon, risk tolerance, income, and financial goals. You can allocate assets to your portfolio based on age using the ‘100 rule’ or 120 rule.’ Redefining your asset allocation may be necessary for the event of new information, lifestyle changes, and wrong risk tolerance assessment.

What are age-based asset allocation guidelines?

You may have heard of age-based asset allocation guidelines like the Rule of 100 and Rule of 110. The Rule of 100 determines the percentage of stocks you should hold by subtracting your age from 100. If you are 60, for example, the Rule of 100 advises holding 40% of your portfolio in stocks.

Are stocks a risky asset allocation based on age?

Reminder: Stocks or the stock market are riskier than bonds and cash/cash equivalents. This rule makes asset allocation based on age easier. You can set up your portfolio based on this asset allocation rule and adjust it as you grow older. However, it is not a perfect approach.