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Money MythBuster: 100 minus age = equity

Asset allocation is more than a formula

Ruth Saldanha 22 October, 2019 | 2:32AM
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Mr. Morningstar Money Man: 100 minus age equals equity, which means if you are 30 years old, you take 70% of your portfolio invested in equities and the rest in fixed income. Right? Wrong. Asset allocation is not a formula. It's a highly complex decision that takes into account your personal situation, including, your risk tolerance, financial goals, income, resources, your entire financial picture.

Reducing this process into a formula might not necessarily work for you and can be dangerous. Like this guy allegedly said, everything should be as simple as possible, but not simpler. This myth busted.

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About Author

Ruth Saldanha

Ruth Saldanha  is Senior Editor at Morningstar.ca. Follow her on Twitter @KarishmaRuth.


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