Re: Balanced portfolio with index funds

There is nothing "magic" about the number 100 in the "rule of 100."
You could just as well use the number 125.

I personally was 100% invested in equities until age 50. That is, I
was following the "Rule of 150." At age 50, I started reducing my
exposure to equities and increasing the bond portion of my portfolio.
At age 61, I have 55% domestic equities, 10% foreign equities, 30%
bonds, and 5% cash. I expect to maintain that asset allocation for
many years to come, as I feel quite comfortable with it. Thus, my
current rule could be called the "rule of 126."

The key to successful investing for the long term is to know yourself
well. Many people would not feel comfortable with my asset allocation.
They would have felt great discomfort in 2000, 2001, and 2002,
possibly making irrational decisions regarding their investments. For
them, the "Rule of 100" or even the "Rule of 80" might be more
appropriate.

Dave

"BMS" <[EMAIL PROTECTED]> wrote in message news:<[EMAIL PROTECTED]>...
> There is the rule of 100. Take 100 subtract your age, the difference is the
> percentage that should be in equities and the rest in fixed income.
> 
> However what you are proposing is not close to a balanced retirement plan.
> Having all your retirement in 2 types of funds, a large cap index and a bond
> fund. Go look at some asset allocation models and compare them to your risk
> tolerance profile. Up to 95% of your return can be linked to proper asset
> allocation.