Phil Cannella – Phillip Cannella Blog: Phil Cannella says that there is a very basic formula you can follow in order to mitigate risk in your portfolio. As Phil Cannella explains, it will not Crash Proof your investment accounts completely but it will reduce your exposure to risk for sure.
The formula is popularly known as the rule of 100. As Phil Cannella explains it the formula goes like this: “100 – YOUR CURRENT AGE = % OF RECOMMENDED RISK. According to the rule, at 80 years old you should have no more than 20% of your money in risk accounts; that is, invest 20% aggressively in stocks, bonds and mutual funds, but hold 80% of your assets in conservative accounts. It’s my opinion that if you follow the Rule of 100, it will generally safeguard your retirement. It may not crash proof it, but it will mitigate the risk you’re exposed to.”
This is a very handy formula every investor should use, says Phil Cannella. Certainly we should all consider fully crash proofing our investment accounts and as we progress in life and get holder we should take as much risk out of our accounts as possible. But for the everyday investor, this rule is a good rule of thumb to use.
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