Age Equals Asset Allocation
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Age Equals Asset Allocation “Take 100, subtract your age, and that’s the percent you should have in stocks.” Should age by itself be enough to dictate your portfolio? A hypothetical example: Two men, both age 75 Bob—a widower with an adult son and no living parents. Needs income from his portfolio for living expenses. Jim—married and has a very long life expectancy. He has plenty of income sources and his portfolio is a safety net for emergencies. Same age, but much different situations—they will need different portfolios with different structures. A portfolio’s benchmark indicates a desired level of performance, and helps determine asset allocation. The following can help to determine a benchmark:
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The myth that investment allocation is a simple function of the investor's age.
Transcript of Age Equals Asset Allocation
Age Equals Asset Allocation
Take 100, subtract your age, and thats the percent you should have in stocks.Should age by itself be enough to dictate your portfolio?
A hypothetical example: Two men, both age 75 Boba widower with an adult son and no living parents. Needs income from his portfolio for living expenses. Jimmarried and has a very long life expectancy. He has plenty of income sources and his portfolio is a safety net for emergencies. Same age, but much different situationsthey will need different portfolios with different structures.
A portfolios benchmark indicates a desired level of performance, and helps determine asset allocation.
The following can help to determine a benchmark: Time Horizonhow long do you need your money to last? Expected Returndo you need to preserve, or do you have room to grow? Cash Flow Needswill you require a regular income from your portfolio?
