Portfolio a alokace
The 100-Minus-Age Rule: How Much to Hold in Equities and Why It Isn't Enough
Key takeaways
- The 100-minus-age rule provides a simple baseline for equity allocation without complex analysis.
- Due to longer life expectancy, many financial planners now use 110 or 120 minus age.
- The rule is a starting point, not a dogma — adapt it to your horizon, risk tolerance, and financial situation.
- A young investor with a 30-year horizon can hold 90–100% in equities even if the rule says less.
The 100-minus-age rule is a simple heuristic: subtract your age from 100 and the result is the percentage of your portfolio that belongs in equities — the rest goes into bonds.
How the rule works
A thirty-year-old investor: 100 − 30 = 70% equities, 30% bonds. A fifty-year-old: 50% equities, 50% bonds. A seventy-year-old: 30% equities. The logic is clear — the older you are, the shorter the horizon, the less volatility you can tolerate. Bonds stabilise the portfolio over a short horizon.
Why the rule falls short
The rule was created at a time when people died younger and bonds carried decent yields. Today:
- Average life expectancy in the Czech Republic exceeds 75 years, meaning the real investment horizon is longer
- Bonds in a low-rate environment (2010–2021) earned almost nothing
- Inflation eroded the real value of bond-heavy portfolios
This is why many financial planners have moved to 110 or 120 minus age, preserving a higher equity allocation for longer.
When the rule does not apply
The rule ignores your risk tolerance (psychologically unmanageable losses lead to selling at the wrong time), income beyond investments (state pension, property), and specific goals. The rule is therefore a starting point, not a dogma. See also asset allocation and how to build your first portfolio.
FAQ
What is the 100-minus-age rule?
A simple heuristic: subtract your age from 100 and the result is the equity percentage of your portfolio, with the remainder in bonds. A thirty-year-old holds 70% equities, a fifty-year-old 50%. The aim is to reduce portfolio volatility with age.
Why do some people use 110 or 120 minus age?
Because of longer life expectancy and low bond yields in recent decades. A higher number preserves more equities for longer, which is advantageous with a 30–40-year retirement horizon.
Can a young investor hold 100% in equities?
Yes, if they have a long horizon (20+ years), stable income, an emergency reserve, and can psychologically handle major drawdowns. The 100-minus-age rule is a starting point, not a ceiling.
How does the rule change in retirement?
In retirement, shift the allocation gradually more conservative — a larger share of bonds and cash. But even in retirement, moving entirely out of equities makes little sense if the horizon is still 20+ years.