10 Rules: Stocks, Stocks, Stocks

The seventh tip of Forbes ten rules for building wealth deals with “proper” asset allocation and that you should be investing more in stocks and less in anything else. Their rule of thumb? 120 minus your age should equal allocation percentage in stocks and the rest should be put in bonds.

Stocks are usually more volatile than many other vanilla investments (unless you start playing in the big pool with derivatives) but the idea is that what happens the next few years won’t affect your long term plan, which will come to fruition in thirty or forty years. This is also the concept behind target retirement and lifecycle funds, to move assets away from more volatile investments like stocks as you near retirement.

Source: Fortune