From the course: Financial Basics Everyone Should Know
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Applying two rules for retirement
From the course: Financial Basics Everyone Should Know
Applying two rules for retirement
- [Instructor] You may have critical questions about retirement planning, like will I be able to retire? At what age can I accumulate enough to retire? How much do I need? The solution to these questions at a high level is this: successful asset allocation. Asset allocation refers to dividing your money among several different investments or asset classes. The first step is to know your financial needs. Figure out how much you need in order to retire at 65. This includes your vision, goals, plans, budget, and risk tolerance. Second, consider using the age rule of thumb to allocate your assets. That rule says that whatever your age is, that percentage of your assets should be invested in bonds. If you're 75, 75% of your assets should be in bonds. If you're 30 years old, 30% of your assets should be in bonds. The remainder of your assets should be in stocks. This rule is a good starting point for most investors. Keep in mind, if you're younger than 40 years old, a small additional tilt…
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