“The best allocation for any investor is the one where the mix of stocks, bonds, cash and alternative investments allows you to sleep at night.”
Glenn Ruffenach, former reporter and editor for The Wall Street Journal, and co-author of “The Wall Street Journal Complete Retirement Guidebook,” September 6, 2016
The Takeaway: The old rule of thumb was that your portfolio’s stock weighting should equal 100 minus your age (so, for example, if you were age 70, you should own 30% stocks). But investors soon discovered that – if they wanted to live a halfway decent life and not run out of money – they needed more stocks, and more growth, to accommodate today’s longer life expectancies and rock-bottom interest rates. Newer formulas call for stocks equal to 110 or 120 minus your age, or in some cases, even higher allocations. Of course, everyone’s situation is different and will depend on risk tolerance, lifestyle needs, hopes of leaving a legacy, and non-portfolio income flows from Social Security and pensions.