As far as most investors are concerned, there are really only three basic investment categories — stocks, bonds, and cash equivalents. Commodities, currencies, and a few other “alternative assets” round out the bigger list.
Yet even with just these few choices, it’s a challenge to figure out how much of your money should go to each.
One traditional rule of thumb says to subtract your age from 100. The resulting answer determines the percentage of stocks that should be in your portfolio.
For example, a 40-year-old investor would allocate 60% to equities.
The obvious idea here is that the longer you have until retirement, the more aggressive you can be with your portfolio.
Since stocks are historically more volatile — but also better able to outpace inflation over long periods — they deserve the lion’s share of a younger investor’s nest egg.
Learn more about investing in dividends and how to determining what should be in your retirement portfolio.
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InvestingInDividends.com
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