Asset Allocation by Age: Rules of Thumb
Asset allocation — your mix of stocks and bonds — is the biggest driver of both your returns and how bumpy the ride feels.
These are rules of thumb for education, not personal recommendations. Your ideal mix depends on goals, timeline, income stability, and risk tolerance.
Popular rules
- "Age in bonds": a 40-year-old holds 40% bonds. Conservative and easy.
- "Age minus 10 (or 20) in bonds": more stock for longer growth, more volatility.
- Target-date glide paths: often ~90% stocks until the 40s, gliding to ~50% around retirement.
Need, ability, and willingness
Ask: How much risk do I need to reach my goal? How much can I afford (job security, emergency fund, timeline)? How much can I tolerate emotionally? The last matters most — a portfolio you abandon in a crash is worse than a slightly "suboptimal" one you hold.
A stress test
Imagine stocks fall 50%. With 80% stocks, a $100,000 portfolio drops to about $60,000. If that would make you sell, choose more bonds.
Not financial advice. This article is general education. Consider your own circumstances or consult a fee-only fiduciary.