The Rule of 100
How to
Estimate the Amount of Risk in Your Portfolio Using the Rule of 100
How much of your portfolio should be in risky investments? The rule of 100 can help you decide.
Essentially, the formula is the number 100 minus your age, which equals the percentage of investments in your portfolio that should be considered risky in nature.
As an example: If Joe is 65 years old, his rule of 100 calculations should be as follows:
100 minus 65 (Joe’s age) equals 35. 35% is the percentage of risky investments that should be in Joe’s portfolio.
Therefore, Joe should have 65% of his money protected in secure accounts, and only 35% at risk in the market.
How the Rule of 100 Impacts You
During your working years, your accounts can withstand the ups and downs of the market. If a market correction occurs, your account typically can bounce back. However, as you get older, you don’t have this luxury. The less time your account has to adjust for a market drop, the more conservative about it you should be.
How We Can Help
Here at Safe Harbor, we work with clients on both conservative and more risky investments. We can help you balance your overall portfolio in a way that suits you best. One of our consultations will offer the information you need to help you plan your financial future. Let us help you determine which of your current investments are safe, and which are at risk.
