Allocation Across Your Life
How the right mix shifts as you move from your first job toward retirement.
The right allocation isn’t fixed for life — it should evolve with your time horizon and your need for the money. Early on you have decades to ride out volatilityThe size of price swings — not their direction.; near retirement you need stability because you’ll soon be spending the money.
The core principle: the longer until you need the money, the more equityA unit of ownership in a company. you can hold, because you have time to recover from crashes. As your horizon shortens, you gradually shift toward debt to protect what you’ve built.
- Early career (long horizon) — heavy equityA unit of ownership in a company. (e.g. 70–90%); volatilityThe size of price swings — not their direction. is your friend, you’re buying cheap for decades.
- Mid career — start trimming equityA unit of ownership in a company., building debt as goals (house, kids’ education) approach.
- Near/in retirement — much higher debt, lower equityA unit of ownership in a company., to protect capital and fund withdrawals — while keeping some equityA unit of ownership in a company. so the portfolio still outpaces inflationThe steady rise in prices that erodes money’s purchasing power..
Is the old “100 minus your age in equity” rule any good?
It’s a rough starting heuristic, not gospel. With longer lifespans and the need to beat inflation in retirement, many now use “110 or 120 minus age.” Treat it as a conversation starter, then adjust for your actual goals, income stability and risk tolerance.