The Rule of 100
During your younger years, your accounts could probably withstand the ups and downs of the market.
If a market correction occurred, you probably had time to bounce back. But as you get older, you don’t have that luxury. The less time your account has to adjust after a drop, the more conservative you should be. By this logic, you can calculate exactly how cautious you should be when making investments, based on your age. This is known as the rule of 100.
In order to decide how much of your portfolio should be in risky investments, versus how much should be kept safe, you simply need to subtract your age from the number 100. As an example:
If you’re 62 years old, your rule of 100 calculation would look like:
100 – 62 (your age) = 38
This means 38% of your portfolio should be put into riskier investments, while the remaining 62% should be protected in more secure accounts.
Here at Hybrid Financial, we offer a variety of types of products to help fit your unique financial situation. We work with clients on both conservative and more risky investments. Therefore, we can help balance your portfolio to suit your needs.
Schedule a one-on-one meeting with us
We can help you devise the right strategy for your financial future.