Asset Allocation

Asset Allocation

Asset Allocation

What is the Money Date? A weekly time to check in. 3 things we review and update: 
1. Spending
 2. Earning
 3. Savings

A lot of clients ask me: How much of my portfolio should be allocated in various types of Investments? Stocks. Bonds. Real estate. Commodities.

This brings us to a discussion about asset allocation. Allocation is a fancy word for recipe. There are different ingredients to go into creating a dish. Same goes for your portfolio. Asset allocation is an investment strategy that aims to balance risk and reward by apportioning a portfolio’s assets according to an individual’s goals, risk tolerance, and investment horizon.

The old rule of thumb used to be that you should subtract your age from 100 – and that’s the percentage of your portfolio that you should keep in stocks. For example, if you’re 30, you should keep 70% of your portfolio in stocks. If you’re 70, you should keep 30% of your portfolio in stocks.

However, with Americans living longer and longer, many financial planners are now recommending that the rule should be closer to 110 or 120 minus your age. That’s because if you need to make your money last longer, you’ll need the extra growth that stocks can provide.

Remember the buckets from last week’s discussion:
1. Don’t need money- 7 years plus – expose to stocks for sure
2. Might need money in 3 to 7 years – some minimal exposure to stay above inflation
1. Need safe money – no stock exposure.


Anna Sergunina
Anna Sergunina

I passionately believe that in order to live a life of fulfillment and joy, we must genuinely serve each other in any way possible. I found my mission in life to serve others via financial planning. Anna regularly writes about personal finance. Her work appears on Business Insider, Nasdaq, Nerdwallet, among others. Anna is the creator of Money Flow system.

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