The classic recommendation for asset allocation is to subtract your age from 100 to find out how much you should allocate towards stocks. The basic premise is that we become risk averse as we age given we have less of an ability to generate income.
We also do not want to spend our older years working. We
are willing to trade lower returns for higher certainty.
The following chart demonstrates the conventional asset
allocation by age.
Candidates:
* * You believe in conventional wisdom and do not want
to overcomplicate things.
* * You expect to live to the median age of 78 for men
and 82 for women.
* * You are not very interested in the stock market,
bond market, or /economics and would rather have someone manage your money
instead.
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Conventional Asset Allocation Model..!
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Age of Investor
|
Stocks (%)
|
Bonds, Debt Funds (%)
|
|
0 to 18
|
100
|
0
|
|
20 to 24
|
80
|
20
|
|
25 to 29
|
75
|
25
|
|
30 to 34
|
70
|
30
|
|
35 to 39
|
65
|
35
|
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40 to 39
|
60
|
40
|
|
45 to 49
|
55
|
45
|
|
50 to 54
|
50
|
50
|
|
55 to 59
|
45
|
55
|
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60 to 64
|
40
|
60
|
|
65 to 69
|
35
|
65
|
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70 to 74
|
30
|
70
|
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75-110
|
25
|
75
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