100 minus age rule
At 30, hold 70% in equity. The 100 minus age rule has survived decades of personal finance advice because it is simple, memorable, and directionally right.
Why the rule exists at all
The Nifty 50 has delivered single years of +50% and years of deep losses, while twenty-year windows have smoothed into steady growth.
Where it breaks: the income floor
The rule looks only at your age. It ignores the question that actually determines how much risk you can take: if the portfolio fell 40% tomorrow, would anything in your life change?
Where it breaks: longer retirements
The rule was built when retirement lasted 10 to 15 years. Indians now routinely live 25 to 30 years past their working lives.
A better mental model
Instead of asking your age, ask three questions. When do I need this money? What income covers my life if this money falls?
At 30, hold 70% in equity. At 50, hold 50%. At 65, hold 35%. The 100 minus age rule has survived decades of personal finance advice because it is simple, memorable, and directionally right. It is also, for a growing number of Indians, quietly wrong in both directions: too aggressive for some, too timid for others.
Why the rule exists at all
Equity is volatile. The Nifty 50 has delivered single years of +50% and years of deep losses, while twenty-year windows have smoothed into steady growth. Time is what converts equity’s volatility from a danger into a fare you pay for higher returns. The rule encodes exactly that: young investors have time, so they hold equity; older investors need the money soon, so they hold less.
I use it as the starting point in the allocation framework in Farming Money, and as a rebalancing signal it is genuinely useful. When a bull run pushes your equity share well above target, the rule tells you to trim without any opinion about where the market goes next.
Where it breaks: the income floor
The rule looks only at your age. It ignores the question that actually determines how much risk you can take: if the portfolio fell 40% tomorrow, would anything in your life change?
A 60-year-old with a full government pension, a paid-off house, and rental income has her expenses covered before her portfolio earns a rupee. Her investments are surplus, and surplus can take risk. For her, the rule’s suggested 40% equity is too timid; 55 or 60% is entirely rational, because the pension is already doing the job of the debt allocation.
A 32-year-old founder with no steady income and a home down payment due in three years is the mirror image. The rule says 68% equity. But the down payment money cannot survive a 40% drawdown on a three-year horizon. Age says aggressive; the goal says conservative. The goal wins.
Where it breaks: longer retirements
The rule was built when retirement lasted 10 to 15 years. Indians now routinely live 25 to 30 years past their working lives. Money that must fund three decades cannot be mostly parked in fixed income, because inflation will outrun it. This is why many advisers now suggest 110 or 120 minus age instead. The specific number matters less than the admission driving the change: a long retirement needs equity’s inflation-beating engine running well into your seventies.
A better mental model
Instead of asking your age, ask three questions. When do I need this money? What income covers my life if this money falls? And will I actually hold through a crash, or will I sell?
The last question is the one everyone skips. A rule you abandon in a panic is worse than a timid rule you follow. If a 70% equity allocation would make you sell at the bottom, then your correct allocation is lower, whatever your age.
Read: Starting to invest
Use 100 minus age the way you would use a default password: fine as a starting point, unacceptable as a permanent choice. The right allocation is written from your horizon, your income floor, and your honest temperament. Age is only a rough proxy for all three.