110 − age rule
Asset allocation: stocks, bonds, and time
Younger investors with 30+ year horizons can tolerate 90-100% stocks; bonds reduce volatility but lower long-term returns by 1-2 percentage points annually. A common rule of thumb is "100 minus your age in stocks" but research suggests this is too conservative. Rebalance annually to maintain your target — target-date funds do this automatically and are the simplest default.
Level
Try calculatorKey takeaways
04 · ideas- Younger investors: tolerate 90–100% stocks
- Bonds reduce volatility but lower long-term returns
- Rebalance annually to maintain target allocation
- Target-date funds do this automatically
Asset allocation is how you split your investments between stocks (higher return, higher risk) and bonds (lower return, lower risk).
The classic rule: 110 minus your age = stock percentage- Age 30 → 80% stocks, 20% bonds
- Age 50 → 60% stocks, 40% bonds
- Age 70 → 40% stocks, 60% bonds
Why this matters: In 2008, stocks dropped 37%. A 100% stock portfolio lost $370,000 on every $1M. A 60/40 portfolio lost about $200,000. The difference: lower returns in good years, much less pain in bad years.