Investing Basics: The 100 Minus Age Rule
The 100 minus age rule is a great way to determine one’s asset allocation. That is, how much you should allocate in equities and how much in debt.
For this, subtract your age from 100, and the number that you arrive at is the percentage at which you should invest in equities. The rest should be invested in debt.
For example, if you are 25 years old and you want to invest £100 every month. Here, if you use the 100 minus age rule, the percentage of your equity allocation would be 100 – 25 = 75%. Then £75 should go to equities and £25 in debt.
Similarly, if you are 50 years old and want to invest £1,000, then according to the 100 minus age rule the equity allocation would be 100 – 50 = 50%. That means £500 should go in equities and £500 in debt.
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