Comments on: Stock Portfolio Rule-of-Thumb http://www.moneyhacks.org/2007/02/12/stock-portfolio-rule-of-thumb/ Tips and tools to save time and money. Thu, 20 Nov 2008 08:09:22 +0000 http://wordpress.org/?v=2.5.1 By: Andrea >> Become a Consultant Blog http://www.moneyhacks.org/2007/02/12/stock-portfolio-rule-of-thumb/#comment-189 Andrea >> Become a Consultant Blog Thu, 15 Feb 2007 23:10:23 +0000 http://www.moneyhacks.org/2007/02/12/stock-portfolio-rule-of-thumb/#comment-189 From about 2000 to 2003, my stocks/funds dropped about 40%. That wiped out all the gains I'd ever made in my young life -- and I had 10 or 20% in CDs. I've only just regained my position in the past year or so. (Note that a 40% drop requires a 66% gain to come back to where you were.) Now I closely adhere to the 40% bonds/CDs rule. Even though the market may average 11%, you have to understand that there have been 10-year periods in history where you would have actually lost money. The market is booming now, so it's easy to forget that the market can have a sharp correction. From about 2000 to 2003, my stocks/funds dropped about 40%. That wiped out all the gains I’d ever made in my young life — and I had 10 or 20% in CDs. I’ve only just regained my position in the past year or so. (Note that a 40% drop requires a 66% gain to come back to where you were.)

Now I closely adhere to the 40% bonds/CDs rule. Even though the market may average 11%, you have to understand that there have been 10-year periods in history where you would have actually lost money. The market is booming now, so it’s easy to forget that the market can have a sharp correction.

]]> By: Enough Wealth http://www.moneyhacks.org/2007/02/12/stock-portfolio-rule-of-thumb/#comment-126 Enough Wealth Tue, 13 Feb 2007 00:00:29 +0000 http://www.moneyhacks.org/2007/02/12/stock-portfolio-rule-of-thumb/#comment-126 I have my six year old son's retirement account invested 100% in a geared stock fund - so he's effectively 150% invested in stocks. Perhaps the rule should be 150-2x your age? This would have the twenty-somethings using gearing, and the 70 year old down to only 10% stocks. Then again, everyone's thumbs are different sizes, so there's no one "rule of thumb" that fit all... Regards http://enoughwealth.blogspot.com I have my six year old son’s retirement account invested 100% in a geared stock fund - so he’s effectively 150% invested in stocks. Perhaps the rule should be 150-2x your age? This would have the twenty-somethings using gearing, and the 70 year old down to only 10% stocks.

Then again, everyone’s thumbs are different sizes, so there’s no one “rule of thumb” that fit all…

Regards
http://enoughwealth.blogspot.com

]]> By: Russell Heimlich http://www.moneyhacks.org/2007/02/12/stock-portfolio-rule-of-thumb/#comment-125 Russell Heimlich Mon, 12 Feb 2007 20:52:33 +0000 http://www.moneyhacks.org/2007/02/12/stock-portfolio-rule-of-thumb/#comment-125 What will all of the 19 year olds do? What will all of the 19 year olds do?

]]> By: Duane Gran http://www.moneyhacks.org/2007/02/12/stock-portfolio-rule-of-thumb/#comment-124 Duane Gran Mon, 12 Feb 2007 20:03:39 +0000 http://www.moneyhacks.org/2007/02/12/stock-portfolio-rule-of-thumb/#comment-124 Like many rules of thumb, context is everything. The unspoken part is that not all stocks are considered equal risk and not all bonds are safe havens for your money. If one wishes to follow this rule it would also make sense to gradually shift to less speculative asset classes of stock. While a youngster may feel content to invest in speculative oil ventures I doubt many retirees would find such stock to be suitable. Like so many things financial, the answer is "it depends." Like many rules of thumb, context is everything. The unspoken part is that not all stocks are considered equal risk and not all bonds are safe havens for your money. If one wishes to follow this rule it would also make sense to gradually shift to less speculative asset classes of stock. While a youngster may feel content to invest in speculative oil ventures I doubt many retirees would find such stock to be suitable.

Like so many things financial, the answer is “it depends.”

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