Investing
How Much Belongs in Stocks Is Not a Question About Age
The familiar rules of thumb disagree by twenty points at the same age. What decides it is how long you could avoid selling.
Educational only. This explains how these products and accounts work in general. It is not financial, tax, or legal advice, and not a recommendation to buy anything. Your situation is specific to you — check with a licensed professional before acting.
Someone in their late eighties holding almost everything in stocks will reliably start an argument. Half the room says it is reckless at that age. The other half points out the money has done well.
Both are arguing about the wrong variable.
The rules of thumb contradict each other
You have probably met at least one version: subtract your age from 100 and hold that much in stocks. Or from 110. Or from 120.
At 70, those give 30%, 40%, and 50%. Twenty percentage points apart, from rules that all sound equally authoritative. They cannot all be right, and the spread tells you what they are: memorable heuristics, not findings.
They are not useless. They encode a real idea — hold fewer stocks as your horizon shortens. But they use age as a stand-in for horizon, and age is a poor stand-in.
The question that actually decides it
Stocks are not risky because they fall. They are risky because they might fall at the moment you need to sell them.
Someone who can leave stocks alone for several years can wait out a decline. The loss stays on paper, and paper losses reverse. Someone who has to sell shares this year to pay for living has turned that same decline into a permanent loss — the shares sold at the bottom are not there when prices come back.
So the useful question is not "what percentage suits my age?" It is:
How many years of spending could I fund without touching stocks?
That is what the stock allocation stress test reports. Not a recommended percentage — a number of years.
Which is why the same age gives different answers
Take two 70-year-olds with identical portfolios and identical 90% stock allocations.
The first has a pension covering their expenses. The portfolio is not being drawn on, and may be intended for heirs. Its horizon is decades, regardless of the owner's age. A high stock allocation is defensible.
The second funds every bill from that portfolio, with little held outside stocks. A bad two years forces selling into the fall. The same allocation is fragile — and the fragility has nothing to do with being 70.
Same age. Same percentage. Completely different risk. Any rule that gives both the same answer is not looking at the thing that matters.
The variable no arithmetic can capture
How you behave when it happens.
An allocation you abandon in a downturn is worse than a more conservative one you can hold, because selling near the bottom locks in the loss and usually means missing the recovery as well.
If a 40% fall would genuinely make you sell, then 90% in stocks is wrong for you, whatever the arithmetic says. That is not a failure of discipline to be scolded away — it is information about yourself, and building around it beats pretending otherwise.
What to actually do
- Work out what your portfolio has to fund each year, after other income.
- Check how many years that is covered by everything not in stocks.
- Ask whether that number is long enough to sit out a serious fall without being forced to sell.
- Then ask, honestly, whether you would hold through it.
If the answer to either is uncomfortable, that is the signal — not the number of candles on your last birthday.
Allocation depends on income, pensions, health, timeline, and temperament. Nothing here is a recommendation for your situation, and this is one of the areas where a licensed professional looking at your whole position genuinely earns their fee.