120 Rule Calculator
Today, we’ll explore the ingenious 120 Rule Calculator—a simple yet powerful tool to help you decide about your investments portfolio. Use basic and advanced calculator for instant calculations!
Formula:
The formula is:
| Variable | Meaning |
|---|---|
| Percentage of Portfolio in Stocks | |
| Your Age |
Solved Examples:
Example 1:
Given:
- Age () = 30
| Calculation | Instructions |
|---|---|
| Step 1: S = 120 – A | Start with the formula. |
| Step 2: S = 120 – 30 | Replace with 30. |
| Step 3: S = 90 | Subtract 30 from 120. |
Answer: At age 30, 90% of your portfolio should be invested in stocks.
Example 2:
Given:
- Age () = 50
| Calculation | Instructions |
|---|---|
| Step 1: S = 120 – A | Start with the formula. |
| Step 2: S = 120 – 50 | Replace with 50. |
| Step 3: S = 70 | Subtract 50 from 120. |
Answer: At age 50, 70% of your portfolio should be invested in stocks.
What is 120 Rule?
The 120 Rule Calculator is helpful tool in financial planning to help determine the ideal asset allocation between stocks and bonds in your investment portfolio. The rule suggests that you should subtract your age from 120 to find the percentage of your portfolio that should be invested in stocks. The remaining percentage would be allocated to safer investments, such as bonds. This rule of thumb adjusts your investment strategy as you age, typically becoming more conservative over time.
