Here’s an excerpt from the posting 4 Rules that Can Save You $40,000: A Beginner’s Guide to Investing. Click the title for the full story.
Stocks vs. Bonds: The Rule of Thumb
The simple rule of thumb is 110 minus your age = the percentage of your portfolio that shoul d be in stocks. If you’re 35, this means 110-35= 75% of your portfolio in stocks, and 25% in bonds.
If you have a high risk tolerance, increase that to number to 120 minus your age. So if you have the stomach to withstand more volatile returns, and you’re 35 years old, put 120-35= 85% of your portfolio in stocks, and 15% in bonds.
If your risk tolerance is low, drop the number to 100 … so if you’re 35, 100-35 =65% of your portfolio goes to stocks, and the rest to bonds.
What is your risk tolerance? Take this quiz.