Comments on: 25 Rules to Grow Rich By #7: Stock Portfolio

By: Red

Red — Wed, 19 Aug 2009 21:12:06 +0000

Umm…a bond fund by it’s very definition is NOT stock or a stock fund, it’s exactly the kind of thing that Trent is referring to when he says “NOT in stocks”. Your gold stock may or may not be “stock”–if you own shares of a company that MINES for gold or builds mining equipment, it’s a stock, if you own a piece of a commodities type fund that HOLDS gold, it’s an inflation hedge, not a stock for the purposes of this conversation. Nothing wrong with bond funds and commodities (or other diversification funds such as REIT’s) but they are for your “not in stocks” money. I am slightly more conservative (I’m currently 35 and shooting for retirement at 48 once the kids are in college) so I’m holding a little higher percentage of fixed income (20%) and REIT (10%) but for a traditional retirement age I think your numbers are good for the under 60 crowd. Personally, I plan on holding at least 35-40% in stocks until I die at the age of 105.

By: JustinJamm

JustinJamm — Tue, 21 Jul 2009 22:46:19 +0000

Great! Since I’m young, this re-write means I should have 100% in stocks, which I basically do, if you count my bond fund as a stock and my gold stock as a stock rather than as a precious metals investment.

Both again, I *AGREE*. =)

By: Kris

Kris — Fri, 19 Jun 2009 19:07:03 +0000

This advice seems more sound now that we have gone through a huge downturn. I know there are many 50 – 60 year olds in my company that are complaining how they are stuck here cause they had their retirement heavily in stocks when the market dropped. They don’t necessarily have or didn’t want to take 15 years for it to get back where they were. It has always been good advice to start moving away from stocks and into stable investments (i know they get smaller returns) and I think the re-written rule is definitely sound advice.

By: Roger

Roger — Fri, 24 Oct 2008 09:57:44 +0000

This is an interesting revision. It might just be my fairly-high risk tolerance, but I think your rewritten rule gets a bit too conservative, too quickly. I mean, down to 60% in stocks by age 50, 30% by 65, and completely out by age 80? As Lazy Man said, it seems to be giving up a lot of potential growth, especially if you go on to live to 100 (or longer).

Of course, the problem with any rule of thumb is that we all have different thumbs; what seems reasonable to me might seem rather risky to you, or vice versa. And trying to predict how much risk I’ll be willing to tolerate (or require to keep and grow my nest egg) thirty or forty years from now definitely complicates matters. Thanks for the food for thought, at least.

By: boardmadd

boardmadd — Tue, 26 Feb 2008 14:42:26 +0000

The math is not meant to be an absolute figure, and yes, if you are under the age of 20, then it’s not going to work cleanly.

The point is that, if you are just entering the work force, and you have a *lot* of time ahead of you to plan for retirement, then being invested 100% in stocks or stock funds would make sense.

However, as you get older and are getting closer to that retirement date, then you need to consider pulling back and exposing a little less of your money to risk and perhaps consider other options. On my end, I am looking at changing alocation from funds and stocks that are mostly growth oriented (i.e. their value is determined by their actual stock price) and moving into more investments that pay dividends as a higher percentage of my holdings as I get older (I’m currently 40).

By: Matt

Matt — Fri, 14 Dec 2007 05:17:33 +0000

I think Trent’s rule is sound. My understanding of it is if you are under 30 then nothing should be not in stocks (aka ALL should be in stocks) or as he recommends in index funds.

I don’t think there is any age when you shouldn’t learn about personal finance. You guys who are reading this at 17 and 19 will be in great financial shape if you learn about finances now.

By: Teenanon

Teenanon — Tue, 04 Dec 2007 21:51:52 +0000

This is weird….
13-30=-17
-17*2 is -34
is my math right?
so this is saying you have to be 31 to not get zero or lower for your percentage. At 31 it’s only 2% anyway this says. Are you saying you should be 30 to start investing at all? Or that you should invest it all before you are 30?
Is my math right?? I think so

By: Damian

Damian — Sun, 17 Jun 2007 14:02:46 +0000

Hmm…. this can’t be right… with either of the 2 rules…

I’m currently 19 (yeah, you have teenagers reading a financial blog :S)
Anyway, 120 – 19 = 101
Based on the old rule, I should have 101% of my money should be in stocks… not really possible that, as I only have 100% money

And based on the second rule, 19 – 30 = -11
So -11% of my money should not be in stock, does that mean 111 should be in stock??? Again, not possible

By: Lazy Man and Money

Lazy Man and Money — Fri, 15 Dec 2006 23:59:33 +0000

Hmm, by this rule, I should have 80% of my money out of stocks at age 70? I think that’s a little conservative. What if you live another 30 years? Not only are you missing out on a lot of gains, but you’ll likely be drawing that nest egg down for awhile.

I’d probably go with a number of 40, so that at 70, you have 40% in stocks. That should be enough to grow on for the next 30 years if you need it.

Maybe I’m optimistic in thinking that people will live long times.