There is no single "right" asset allocation, but there are a handful of useful rules of thumb that hold up across decades of data.
The Classic 110-Minus-Age Rule
A common starting point: stock allocation ≈ 110 − your age. A 30-year-old gets 80% stocks; a 60-year-old gets 50% stocks. The remainder is bonds and cash. Adjust if you are more or less risk-tolerant.
Why Bonds Matter Even When Young
Bonds don't make you rich — they keep you in the game. In severe downturns, holding 10–20% in bonds gives you something to sell that hasn't dropped, so you don't have to sell equities at the bottom.
Adjusting Through the Decades
- 20s: Maximum compounding window. 80–90% stocks is fine.
- 30s: Earnings rising fast. Same allocation, but contribute aggressively.
- 40s: Start tilting toward bonds. 70/30 is reasonable.
- 50s: 60/40. Begin thinking about retirement income.
- 60s+: 50/50 or 40/60, with enough cash for 1–2 years of expenses.
International Exposure
Most US investors under-own international equities. A 20–30% slice of stocks in international funds smooths returns and hedges dollar risk.
Rebalance, Don't Tinker
The discipline that matters more than the precise mix is rebalancing — selling whatever's drifted up and buying whatever's drifted down. Our Portfolio Rebalancing Calculator shows you exactly what to buy and sell to hit target.
Bottom Line
Pick a stock/bond split appropriate to your age and risk tolerance, rebalance once a year, and shift gradually toward bonds as you approach retirement. The exact numbers matter less than consistency.
Frequently Asked Questions
What is the "110 minus your age" rule?
It's a simple rule of thumb suggesting your stock allocation should roughly equal 110 minus your current age, with the remainder held in bonds and cash — so a 30-year-old might target about 80% stocks, and a 60-year-old about 50%. It's meant as a general starting point, not a precise formula, and should be adjusted based on individual risk tolerance and circumstances. Several variations of this rule exist using different base numbers.
Why hold bonds at all if stocks generally return more over time?
Bonds are typically included not to maximize returns but to reduce portfolio volatility, since holding some bonds gives an investor something to draw on during a stock market downturn instead of being forced to sell stocks at depressed prices. Even a relatively modest 10–20% bond allocation can meaningfully cushion severe drawdowns. This trade-off between growth potential and stability is a central theme of asset allocation.
How much of a stock portfolio should be international versus U.S. stocks?
A common starting point is roughly 70% U.S. and 30% international within the stock portion of a portfolio, since many U.S. investors are naturally underweight international markets relative to their share of the global economy. Adding international exposure is generally seen as a way to diversify and hedge against U.S.-specific and currency risk. There is no single universally correct split, and reasonable allocations vary by investor and by source.
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