As you move into your retirement years, it’s a good idea to reduce the amount of risk that’s in your portfolio. In this Top Secret Series, Phil Cannella explains how the Rule of 100 can help you assess how much of your assets should be in the risk class of investments and how much should be in the fixed class of investments.
“When should someone get off the market? Particularly those that have been there for a lifetime, those folks that have been on the market for 20, 30 years, some of you for 40 years. When is a good time to get off? Here’s a good rule of thumb to follow since many people don’t know when to get off the market. Many people just stay on and hope for the best. And there’s where people are getting hurt.
There’s a Rule of 100 that many people are aware of, meaning professionals, but no one ever tells the everyday investor. The Rule of 100 works this way. You take your age, you subtract it from 100, and the amount that you have left over is all that you should be invested in stocks, bonds or mutual funds, securities, risk investments. So that if you’re 55 years old, you should only have 45%, at most, of your money in risk investments. If you’re 80 years old, you should have only 20% of your money on the stock market, stocks, bonds and mutual funds, and you should have 80% in a sleep-well account.
That way, if you’re in your 80s and you know you don’t have the time to go back and work another 30 years to reaccumulate what you’re risking on the market, if the market crashes again, at least you have 80% of your money safeguarded and no losses. The Rule of 100 should be applied to everyone. If your accounts have come back, if your accounts are near being back, there’s nothing wrong with applying the Rule of 100.”
Hear more Top Secret Series segments with Phil Cannella that will impact your financial future by visiting https://crashproofretirement.com/radio-show/ and by tuning into The Crash Proof Retirement® Radio Show, Saturdays at 11 AM and Sundays at 1 PM on Talk Radio 1210 WPHT.
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