Stocks vs. bonds4 of 10The rule: The percentage of your portfolio invested in bonds should equal your age.Why it works: Famously repeated by Vanguard founder John Bogle, this rule of thumb helps investors keep in mind that their portfolios need to change as they age, becoming more focused on avoiding risk in their investing than on higher growth. That's because older people have less time to recover from stock market shocks than younger people.Grain of salt: As you enter retirement, taking all your money out of stocks could slow the growth of your portfolio too much, preventing you from keeping pace with inflation and possibly depleting your retirement savings, says Pomeranz. Related Articles:What's your house budget?Spying on a financial proStretch retirement incomeFacts on life insuranceRelated Links:Top 10 causes of debtInvestment goal calculator3 tips for investingTop 10 investing blunders advertisement
The rule: The percentage of your portfolio invested in bonds should equal your age.
Why it works: Famously repeated by Vanguard founder John Bogle, this rule of thumb helps investors keep in mind that their portfolios need to change as they age, becoming more focused on avoiding risk in their investing than on higher growth. That's because older people have less time to recover from stock market shocks than younger people.
Grain of salt: As you enter retirement, taking all your money out of stocks could slow the growth of your portfolio too much, preventing you from keeping pace with inflation and possibly depleting your retirement savings, says Pomeranz.
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