Deciding how much stock to own

April 18, 2008

I've heard a good way to decide how much stock to own is to subtract my age from 100. Do you agree?

I've heard a good way to decide how much stock to own is to subtract my age from 100. Do you agree?

No. That's an overly simplistic idea that doesn't account for the fact that people now live longer. As a result they need more exposure to stocks, even in later years, to keep up with the cost of living. If you're 60 now, following that rule would mean you'd invest only 40 percent of your portfolio in stocks, which might not be enough if you live to be 90. A minimum of 50 percent makes sense for many people, but if you're unsure you may want to consult a financial adviser, who'll determine the appropriate percentage based on factors such as your tolerance for risk, current financial situation, and future needs.

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