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.

0 comments… add one

Leave a Comment

Related pages

cost concept in accountingpayback method of investment appraisaleconomic growth advantages and disadvantagesexplain privatisationskimming and penetrationstatutory liquidity ratio indiaexamples of substitutes goodsjournal entry of bills receivabletypes of convenience goodsadvantages and disadvantages of paybacksocial media marketing advantages and disadvantagesdurable vs nondurable goodsdemerits of globalisationcapitalistic economywhat is factoring in financial managementdistinguish between explicit and implicit costsdictatorship advantages and disadvantagesmarket skimming price strategyadvantages of venture capitalistdifference between a finance lease and an operating leaseordinary shares advantages and disadvantagesadvantages and disadvantages of communist economic systemindirect expenses definition accountingadvantages of capitalismadvantages of decentralization in an organizationadvantages and disadvantages of globalizationbalance sheet vertical analysisadjusting entries for interestcharacteristics of a traditional economysocialist economy advantagesfactors influencing elasticity of demanddifferent types of crossing of chequesrepo full formwho is a consignee and consignordiscounted cash flow disadvantagesdisadvantages of exportingnondurable goods examplesadvantages of a traditional economypre open nsethe laws of diminishing returnsupsell examplesdisadvantages of capitalist economic systemwhat is law of diminishing marginal utilitydebit cards advantages and disadvantagesdisadvantages of mergers and takeoversdifference between capitalism and mixed economyunitary elasticity of demandan example of deferred revenue is unearned rentpricing skimmingdistinguish between cost accounting and management accountingnormal good inferior goodentry for salary payableadvantages of fifo methodexamples of complementary goods in economicsforfaiting definitionimplicit vs explicit costdisadvantages of advertscash discount journal entrywhat is factoring in bankingwhat is vertical mergerfifo method inventorymeaning of wholesaler and retailernon diversifiable riskjournal entry for capital accountdisadvantages of functional organisationstatutory liquidity ratio and cash reserve ratioservice performed but unbilledloans for disadvantaged studentswhat are examples of current liabilitiesexample of nondurable goodsdistinguish between direct and indirect labour