Life Stages and Asset Allocation

In your 20s and early 30s, time is the biggest asset you have. A heavy equity allocation (often 70-90%) is generally appropriate for long-term goals, since decades remain to ride out any downturn — a 30-40% market drop is recoverable when there's no near-term need to withdraw.

Through your 40s, as retirement moves from abstract to a real 15-20 year horizon and obligations grow (children's education, aging parents, a home loan), a gradual shift toward a more balanced mix — commonly 50-65% equity — starts to make sense, trading some upside for reduced volatility on a growing, harder-to-replace corpus.

In the 5-10 years before retirement, protecting the corpus becomes more important than maximizing growth. Money you'll need to withdraw within a few years of retiring shouldn't be riding out a downturn — a bad sequence of returns right at retirement can permanently impair a plan in a way it wouldn't for someone decades from needing the money.

A commonly cited rough starting rule is '(100 minus your age)% in equity,' though it's a starting point, not a formula to follow blindly — actual risk tolerance, other income sources (like a pension), and specific goal timelines should adjust it meaningfully in either direction.