100 Minus your Age Rule

100 minus your age rule is one of the asset allocation strategies, according to this rule the percentage of investments in equities and debt is decided by the age and other factors are not taken into consideration while investing. For example if your current age is 25 years than according to this method of investment you should be putting 75 percent of your money into equity and rest into debt or bonds and as the age increases your allocation to stocks decreases and allocation to debt or fixed incomes securities increases.

This rule is based on certain assumptions like a person will have life span of 100 years, there are no other alternative investments apart from stocks and bonds and it ignores all other things which are important while taking investment decision like risk profile of investor, cash flow needs, general market condition etc…, and that is the reason why in real life this method may not be practical and also few people would be willing o adopt this strategy of asset allocation.

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