![]() ![]() John Bogle advises that "as we age, we usually have (1) more wealth to protect, (2) less time to recoup severe losses, (3) greater need for income, and (4) perhaps an increased nervousness as markets jump around. So, higher stock allocations may be suitable since big drops in stock prices will not hurt as long as you do not flee the market. When you are young, your prime earning years lie ahead, and it will be decades before you need to access the money. ![]() The more risk you can handle, the less bonds you need. How much in bonds? How much in stocks? That's the basic question of asset allocation. While this may sound like a daunting task, there are straightforward guidelines to help in selecting an appropriate asset allocation. These depend on the investment time horizon and on both the investor's financial capacity and emotional capacity to tolerate risk and to stay the course. The asset allocation that works best at any given stage in an investor's life will depend largely on the need, ability and willingness of the investor to take risk. This process of determining which mix of assets to hold in a portfolio is a personal one. ![]() ![]() Asset allocation is both the process of dividing an investment portfolio among different asset categories, and the resulting division over stocks, bonds, and cash. ![]()
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