T. Rowe Price (my company uses them for our 401k plan) offered me this tidbit of information recently in a generic note:Keep stocks in your portfolio:
"Make sure you have some exposure to stocks in your portfolio. Stocks have outperformed all other asset classes over the long term. Remember, retirement investing is a long-term goal. A quick rule of thumb for how much should be invested in stock is (110 - your age) x 1.25."
Example:
- I am 29, soon to turn 30.
- 110 minus 29 = 81
- 81 times 1.25 = 101%
Conclusion:
I should be investing more money then I even make in stocks.
This is kind of stupid:
While I think perhaps it's time to buy, I personally think that one should always keep some investments in bonds and/or cash reserves as a hedge in falling stock markets or if you lose your job. This 'wisdom' also assumes you aren't going to retire until a 'normal' retirement age of about 62 or so.
Chances are, if you are reading this and similar blogs, you are going to retire early, so conventional wisdom may not apply to you (you are special :-).
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