Walk into any bookstore and you'll find hundreds of investing books promising to reveal "secret strategies" and "hidden opportunities." Here's the truth: the most successful long-term investors use surprisingly simple portfolios. The complexity isn't in the investments themselves—it's in having the discipline to stick with your plan when markets get volatile.
Asset allocation—how you divide your money between different types of investments—is the most important decision you'll make. Research shows it accounts for over 90% of your portfolio's long-term performance, far more than individual stock picking or market timing.
Stock Percentage = 110 - Your Age (updated for longer lifespans)
A 30-year-old might start with 80% stocks, 20% bonds. A 50-year-old might use 60% stocks, 40% bonds. This is a starting point, not a rigid rule.
Adjust based on your risk tolerance, timeline, and other income sources like pensions or Social Security.
Represent ownership in companies. Higher potential returns but more volatile. Best for long-term growth.
Loans to governments or corporations. Lower returns but more stable. Provides portfolio stability.
Stocks from companies outside your home country. Provides geographic diversification.
Simple and effective for beginners
Adds international diversification
Ultimate simplicity and automation
Ready to put theory into practice? Use our tools to analyze different asset allocations and see how they perform under various market conditions.
The perfect portfolio is the one you can stick with through market ups and downs. Start simple, stay consistent, and resist the urge to constantly tinker. Time in the market beats timing the market every time.
Remember: you don't need to be an expert to be a successful investor. You just need to be disciplined, patient, and committed to your long-term goals. The compound interest calculator can help you see how your consistent contributions will grow over time.