Asset Allocation by Age: What the Rules Really Mean

What Asset Allocation Is

Split your money into two rough camps.

Growth assets are shares and the funds that hold them. Over long periods they have produced the best returns available to ordinary investors, and over short periods they fall hard and without warning.

Stable assets are bonds, cash and deposits. They grow slowly and they are still there after a bad year.

Your allocation is the proportion between them. It is the single decision that explains most of how your portfolio behaves, more than which specific fund you picked or when you bought it.

The Rules of Thumb

100 Minus Your Age

Subtract your age from 100; that is your percentage in shares. At 30 you hold 70% shares, at 60 you hold 40%.

The logic is that a 30-year-old has decades to recover from a crash and a 60-year-old does not. As the recovery time shrinks, so does the sensible exposure.

The 110 and 120 Variants

The original rule was written when people retired earlier and died sooner. A 65-year-old today may need the money to last another thirty years, which is long enough that holding only 35% in shares creates a different risk: running out.

So the rule got adjusted upward. Same arithmetic, larger starting number.

"Your Age in Bonds"

John Bogle's version: hold roughly your age as a percentage in bonds. At 45, hold 45% bonds.

Worth noticing that this is the 100-minus-age rule stated backwards. 45% bonds is 55% shares, which is exactly what the first row gives you. Two famous rules, one piece of arithmetic. That tells you something about how much precision is really on offer here.

Why Age Is a Proxy, and For What

Age is not the thing that matters. It is a convenient stand-in for two things that do.

Time horizon. How long until you need to spend this money? A crash matters enormously if you are drawing on the portfolio next year and much less if you are not touching it for twenty.

Your tolerance for watching it fall. The allocation you can hold through a bad year is worth more than the theoretically optimal one you abandon in March.

Age correlates with the first and barely at all with the second. That is where the rules get thin:

What the Rules Leave Out in Europe

The rules were written for an American investor and quietly assume an American context.

"Bonds" is not one thing. The rules treat bonds as the safe half. Government bonds of a stable issuer behave very differently from corporate or long-dated bonds, and 2022 was a reminder that long bonds can fall alongside shares rather than cushioning them.

Currency is a second allocation you are making by accident. A euro investor holding a world tracker is roughly 60-70% exposed to dollar assets. That exposure moves your portfolio's value regardless of what the shares do, and no age-based rule mentions it. See currency gain for how to see it separately.

Home bias cuts both ways. European investors often hold more of their own market than its size warrants. It reduces currency risk and concentrates market risk.

Property is usually the largest holding and is usually left out. If you own a home, your net worth is heavily allocated to one illiquid asset in one city. Any allocation figure that ignores it is describing a fraction of your money.

Working Out the Split You Actually Have

Here is the step almost nobody takes, and it is the one that changes decisions.

The rules give you a target. To use a target you need to know where you are, and that number is usually not the one on your brokerage screen, because your brokerage screen is not all your money.

A Worked Example

You check your broker and see a satisfying 80/20:

Equities: EUR 80,000 (80%)
Bonds:    EUR 20,000 (20%)

Now add the rest of what you own. An emergency fund of EUR 20,000 in a savings account, and a workplace pension of EUR 20,000 invested entirely in shares.

Growth:  80,000 + 20,000 (pension) = EUR 100,000
Stable:  20,000 (bonds) + 20,000 (cash) = EUR 40,000
Total:   EUR 140,000

Growth weight: 100,000 / 140,000 = 71.4%

You are at 71/29, not 80/20. The cash pulled it down, the pension pushed it up, and the two did not cancel. Nine percentage points is not a rounding error; it is the difference between two rows of the table above.

The lesson is not that 71 is better or worse than 80. It is that you were making decisions against a number that was not true.

From a Rule to a Target You Can Act On

A rule of thumb gives you a percentage. That is not yet usable, because a percentage in your head does not tell you which holding is out of line.

The step that makes it operational is writing the target down against what you own, so the gap becomes visible and stays visible as prices move. Once a target exists, the difference between it and reality has a name and a number: that is portfolio drift, and it is what turns "I should probably rebalance sometime" into "this holding is 4 points over."

How Turbobulls Shows This

Allocation breakdowns by asset type, broker, currency and tag are available on every plan, including free, which is what lets you see the whole picture rather than one broker at a time. Breakdowns by sector, industry, country and region are on the paid plan.

Custom assets matter more than they sound here: you can track unlisted holdings such as property, so the largest thing you own does not sit outside the calculation. That is the difference between the 80/20 you think you have and the 71/29 you actually have.

Each holding also carries a weight, and you can set a target weight on it, with the gap reported as drift in percentage points. One honest limit worth stating plainly: targets are set per holding, not per asset class, so there is no single "60% equities" target to track against. The class-level view is something you read off the allocation breakdown rather than a number the product computes for you.

The Full Picture: Read These Next

Frequently Asked Questions

Q: Is 100 minus your age outdated?

Q: Does my house count?

Q: What about my emergency fund?

Q: How often should I change the split?

Turbobulls is a tracking and analytics tool, not an investment adviser. Nothing here is investment, tax, or legal advice. Investing involves risk, including loss of principal. Do your own research or consult a licensed professional.