Your Age -10 = % Of Your Portfolio That Should Be In Bonds

Just subtract 10 from your age and that’s how much percentage of your portfolio should be in bonds, commenter sevatt points out.

That’s simpler to do than the old standby advice (that I mentioned earlier this week) of subtracting your age from 110 to get the percentage you should have in stocks, and then subtract that number from 100 to get what you should have in bonds – at least according to conventional wisdom, which may or may not apply to your individual situation or perspective on the market.

Subtract Your Age From 110 To Figure Out How Much Of Your Portfolio Should Be In Stocks Vs Bonds


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  1. FatLynn says:

    Conventional wisdom says your age = your percentage in bonds. It is only in the last 15 years or so that it became your age – 10, as people began taking bigger risks in the market.

  2. Grogey says:

    “…which may or may not apply to your individual situation or perspective on the market.”

    The market sucks right now, that’s my perspective. Damn you DOW stop playing with my 401k.

  3. Loias supports harsher punishments against corporations says:

    If you couldn’t figure it out, are you really capable of adjusting your portfolio anyway?

  4. TailsToo says:

    What would all of those 111 year olds think??

  5. Blueskylaw says:

    When we are in the midst of the worst economic period since the great depression, you don’t put money in bonds but buy dividend paying stocks in large, mid and small cap stocks that have been beaten down.

    • shaleoil24 says:

      you also might reconsider “buy and hold” and instead swing trade a little. If a stock you’re holding is up 20%, sell it and lock in your profits, because that 20% could disappear, and then you can buy again. rinse repeat.

      • Blueskylaw says:

        I’m a daytrader and thats exactly what I do. I have some stocks “salted” away for the long term and then I have a group of about 20 stocks that I trade on a daily basis based on what the market is doing. After a few years you get a good “feel” for how low a stock will drop based on bad news before it starts rising and how high a stock will rise before you would start shorting.

        • shaleoil24 says:

          Hey Blue, good to hear from you, I don’t daytrade per say but I will swing trade, especially in the E&P space. The BP tragedy and subsequent moratorium has created a lot of opportunity to get cheap shares in beaten down companies that had nothing to do with the Macondo spill. Anyway, I think what you’re doing is definitely risky but one of the few ways to take advantage of our crazy stock market these days

    • MaxPower says:

      I have about 40% of my portfolio in relatively stable, dividend paying bonds and it’s working great for me. Because of compliance at my work, I can’t day trade and my stock portfolio stays relatively stable due to the constant fluctuations in the market. Until things straighten out a bit, I’m really comfortable with my allocation because I know that my fixed income fund is going to give me consistent returns of about 5%.

  6. TKOtheKDR says:

    Don’t forget municipal funds, too. It’s always good to mix in a small amount of low-no risk investments.

  7. tinyhands says:

    So now I just need you to fix the “should be in Bonds” part which is still incorrect.

  8. Laines says:

    These are the same bankers and financial “experts” that created the mess we’re in now? Yes, I realize the previous thieves stole all the money and you need us all to invest more for your future golden parachutes but no thanks.

    • shaleoil24 says:

      sorry, but your comment just seems too typical for many folks out there. Obviously the stock market/bonds are risky, but too many people are content with 0.8% return in a savings account. Effectively, the banks are screwing you by borrowing your money at nearly nothing and then making piles of money themselves. I think more people should try to learn as much as they can about basic strategies such as trading, shorting, options, and such. It’s a game, and I bet if you learned all you could about the various strategies, you’d learn how to make some money too. Otherwise you’re just content with your net loss against future inflation and letting the folks who “have” the knowledge make all they can. With your money

      • SideshowCrono says:

        A couple things,

        First the banks aren’t ‘screwing’ you. People demand real time access to money with no risk (a la a savings account) and then they get what the market is dishing out. Say they are getting 0.8%, so? Check the yield on a 3 month Treasury and you can see it’s actually a good deal. Good deal being subjective as you are losing money to inflation (assuming we’re not in the throws of a deflationary spiral) either way.

        Second, “regular” folk should not trade options. Ever. With the exception of a ‘covered call’ strategy (which is actually one of the least risky ways to manage a portfolio of equities), options are EXTREMELY risky. I generally make the following reccomendations based on familiarity to friends and family of mine who want to trade.

        Newbie = Buy long market focused ETFs (SPY)
        Rookie = Above + Sector ETFs
        Intermed = Above + individual stocks (large cap/midcap) & shorting ETFs as a hedge
        Advance = Above + small caps and shorting all individual stocks
        Expert = Above + futures and options

        Just my two cents but never play around with something you don’t understand. A short term horizon doesn’t reduce long term risks of some positions as you never know when issues will go home to roost.

        Good luck everyone.

        • shaleoil24 says:

          “screw” is obviously a relative term, but the money is either sitting there collecting 0.8%, or it could be doing better (or worse). How are you defining “regular” people? What makes some folks able to command options strategies and others not? It’d be like going to a casino and only playing slots, because you don’t understand the table games, even while knowing slots give you the worst chance to make money, statistically. I know this isn’t a good analogy, but it’s the first one I thought of. While I agree covered calls are a good strategy, I would rather keep the stock rather than get it called away as it goes up.

          • SideshowCrono says:

            That’s why I tried to structure my reccomendations based on familiarity to the stock market. When people call ‘investing’ gambling it just makes me think that they aren’t bothering to delve into the specifics. Sure there is a level of uncertainity inherent to investing but if you take the time to know how things work, you’ll do much better.

            If you can’t tell me what an option is exactly or describe what ‘theta’ means (or any of the ‘greeks’ when it comes to options pricing), then you shouldn’t be trading it. It’s certainly not enough to know to have a vague understanding of the relationship.

        • Laines says:

          Thank you for this. I always come away from these articles so annoyed that they all seem to say, “Give us your money! You’ll get back so much more!” That isn’t the truth for most folks. You can see in the comments here that the people that are successful devote a lot of time and energy into research. It’s a full-time job if you want to do it right and hope to make a profit.

      • Laines says:

        Yes, a “game” for suckers. I don’t play games with my money. I use it to keep a roof over my family’s head and to buy food for my kids. Not so that the brokers can falsify quarterly reports and siphon off all the money before the Feds get around to yawning and giving them a weak, “Oh that was bad. You shouldn’t be doing that. We’ll fine you $1000 for the 100 million you embezzled.”

        Learn the rules? The rules only work for the top executives, we all learned that from the latest breakdown.

        Wall street is bullshit. You’ll get better odds at a return from the casinos and at least they’re honest about stealing your money. None of this lie that you can “learn the system and be rich” like Trump! Or Maddoff! Great business heroes there!

        • SideshowCrono says:

          Sure there were greedy bankers looking to make a profit in the past financial crisis but it would have never happened if it weren’t for the other group: financially illiterates like yourself.

          So you don’t “play” with your money? Oh, I see that you just use it to keep a roof over your head. I get it. You don’t save. You live paycheck to paycheck. Awesome for you and your kids I bet. Perhaps even stashing a small amount of savings in a way such that inflation is constantly eating away at your purchasing power? You are sticking it to the man! You are a commando! You are… frankly what you really are is… ignorant.

          Casinos are mathematically set up so that you LOSE money. Investments (while they may lose) basically are mathematically inclined to GAIN money. Or you could just rant a lot about how other people have money and you don’t and blah blah blah.

          Have fun with your financial future.

          • Laines says:

            Wow, you gained all that from my comments? Percepty!

            No, I use this system called “Cash.” If I can’t pay outright for something I don’t get it. I don’t pay the banks interest – they pay ME. I have my savings tied to interest bearing, insured accounts of several types.

            “mathematically inclined to GAIN money?” Right, inclined, not guaranteed like these articles and experts and you keep hinting at. Stocks and bonds make money for the brokers, the lawyers and the top executives at the companies. Rest assured, those folks are all terribly pleased that there is always someone in-line to believe their claims and throw money at them so they can buy into the lie that they too can join that 1%. I think P.T. Barnum said something about it once.

            • magus_melchior says:

              1. Your cash’s purchasing power declines with inflation*, because inflation generally increases the prices of goods. Put simply, unless your income likewise expands with inflation, you are actually losing wealth. Now, austerity is admirable, particularly if you’re in a situation where you can’t afford to put aside a nest egg. But if you’re just being simply miserly because you don’t trust every public corporation on the planet (and believe me, I trust about 80-90% of them about as much as a newborn can throw them), I think you should reconsider your priorities. IMO it’s better to profit off of a company who doesn’t give a crap about you than it is to let them set the agenda by default.
              2. Contrary to what you think, if a public corporation tries to scam its shareholders, it’s going to get sued by shareholders and prosecuted by the Feds. And given case history, it’s probably going to lose big time. So the ultimate power in this relationship is not with the execs on the board, but the shareholders who buy the stocks and elect the board members. After all, if you buy shares of a company, that company is now indebted to you, not the other way around. But that doesn’t mean everything is hunky-dory, because shareholders have a responsibility to insist on executive compensation that actually makes sense, among other issues (fair trade, outsourcing, environment) that they have the power to influence. If you’re going to criticize big business, at least pick private companies that actively stay away from public exchanges because they do not want this accountability, and yet try to influence national discourse through money alone (*cough*Koch Industries*cough*).
              3. The only 100% guaranteed means of earning a buck is a job. You know it, I know it, and so do all those people who are trying to sell you on investing. In fact, anyone who tells you straight up that their investment is 100% sure is a scam artist. But that doesn’t mean the stock and bond exchanges are equivalent to gambling– with casinos, you cannot predict if you’re going to make a positive return unless you expect the casino to ban you for life. With public companies, at least you know how much they’re making and how they’re using shareholder money, so you have an idea of whether they’re going to use that money effectively. Put another way, the probability of getting a steady income by gambling is something like 1-4%, whereas it’s at least 75% if you decide to invest and actually know what you’re doing (it’s certainly easier than counting cards).

              If that figure still makes you feel uncomfortable, then buy inflation-protected bonds from the Treasury– they’ll earn dividends AND guarantee a ROI above inflation, and if they fail, at least you know to get the hell out of the country because the US Treasury is defaulting.

              * The thing that has the Federal Reserve scared is a deflationary spiral– Japan just barely staved one off recently. If deflation sets in, your cash will have more purchasing power, but because it wrecks international trade by stifling exports (among other nastiness), you may eventually find yourself out of a job because your company went bankrupt.

        • shaleoil24 says:

          I think the problem with a lot of people is that they think it’s a “sucker”s game, and the other issue is that they want to get stinking rich. I bet if you studied up and decided you wanted to make something modest, like 10% return, it’s a lot easier than you think, provided you do a bit of learning and then research. I’m not rich, I don’t work for a bank, but I’ve done fine, and haven’t been a “sucker”

          • thisistobehelpful says:

            Wasn’t there a study done saying that if you flipped a coin you’d actually have better stock picks than paying a broker? Something like that.



            It is gambling. Investing in something you personally believe in with a guaranteed share of the profit or product (think co-op) is better than investing in random crap that’s at the whim of someone who doesn’t give a crap whether or not you live as long as they don’t lose.


            And there’s the other turn of that. Maybe if we had real savings accounts with returns matching what the banks make lending that money out to people who can’t pay it back. AND THEN of course when they did get OUR money from the government they didn’t use it to pay any of us back. The problem is that it IS a sucker’s game. Unless you have so much money it’s ok to lose a few grand on a blip, this is not for the average person who just wants to have money to live off of when they get too old to work. The people that will have to rely on SS to make up the difference. Maybe you’re so rich where if you lose $40,000 from your retirement funding it’s ok but a few people I know are now looking at working into their late 70s to make up what stock gambling did to their 401ks.

  9. Benjamininja says:

    Hang on now, I’m supposed to have a portfolio? Of 83% stocks, and 17% bonds?

    As someone back in college again after my last employer went out of business, I don’t exactly have the spare cash to invest in, well, ANYTHING but getting through school

  10. CountryJustice says:

    Port-FOLE-ee-oh? Is that the thing I cashed in and have been living off of since getting laid off from my job a year and a half ago?

    • shaleoil24 says:

      hey bud I feel your pain. Is there a chance you went all cash in March 09, and then put it back in the stock market and tripled your money from then on? One can hope, right?

      • CountryJustice says:

        One can hope. One can also weigh “speculation” against “groceries and utilities.”

        My “seat-of-my-pants” days are far behind me (and let’s be honest, I would’ve just spent the money on drugs and booze back then anyway. :D )

        • shaleoil24 says:

          f groceries and utilities, i thought we were all floating to the promised land on change we can believe in

          • Laines says:

            According to your other comments, you’re raking in gazillions because you know the “rules” to the market. No worries for you, right?

            So tell me, how is President Obama to blame for the Stock Market Crash of 1929?

        • Laines says:

          It’s the old “Let them eat morals!” thinking of the Conservatives. You’re a sucker if you pay for your own housing & meals – that’s what shareholder profits and lobbyists are supposed to do.

          Silly, you shouldn’t have used you savings on frivolous luxuries, you should have rolled it all into Enron stock!

  11. AustinTXProgrammer says:

    With pathetically low interest rates and the threats of bankruptcy do bonds make sense at all right now?

  12. thisistobehelpful says:

    Again, can we get away from the gambling as an investment? It’s better to go play roullette every day just betting the fields.

  13. partofme says:

    What’s 12% of zero?

  14. FrankReality says:

    I hate these so-called rules of thumb. They are are over-simplifications based of assumptions that fit an average economy and an average person with average risk tolerance. Throw in anything that’s off the norm and it can be bad advice.

    If you really think you need bonds, go with a bond mutual fund of very short maturities and be prepared to move away from bonds when the economy picks up. You definitely do not want to be caught with a record low interest rate on a long term bond, because the interest rates will rise eventually, and the value of those bonds will fall when that happens.

    With the instability of the market, holding a larger than normal allocation in cash may be a reasonable option until we see some sort of consistently positive trend.

  15. McKay says:

    I plead ignorance on this subject, but your point about not getting caught with a record low interest rate seems like solid common sense. A recent WSJ op/ed goes so far as to call the current rush into bonds a “bubble.” (Summary and response here, if you are blocked by the subscription wall.)

  16. bravohotel01 says:

    % bonds
    = 100 – ( 110 – age )

    = 100 – 110 + age

    = -10 + age

    = age – 10