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In any event, this rule can teach a powerful lesson about how quickly one can grow their bank balance, or their debt balance, as they choose.
The rule of asset allocation

Folks in the financial realm are often pressed to come up with simple tools to help investors weigh their financial decisions. Many are simplistic, and therefore, often worthless.

Now, this next forgotten rule is about as simple as they come, but despite that, it's actually uncanny how often this rule finds the mark for investors. At the highest level, it can be used to determine how much of your money should be invested in stocks, and how much should be invested in bonds.
The rule says that you need only consider your age as a percentage, and then use that percentage to loosely represent your bond allocation. For example, a 40-year-old investor using this rule would have about 40% of their portfolio invested in bonds (i.e., 40/100). The remaining 60% would be allocated to stocks.

As far as the rule is concerned, it's as simple as that. However, here I would offer a little more guidance, and toss in a requirement of my own. This rule has been around for quite some time, and a few things have changed since it was put forward. For one thing, we're living longer, and that means we need to invest aggressively enough to outpace inflation and keep our earnings intact.

After all, what good is it to walk down the aisle at Wal-Mart (NYSE: WMT) with $1,000 in our pockets if a gallon of milk costs $1,001? Therefore, when using this rule, I would lump cash and other short-term investments into the resultant bond allocation. If you don't do that, you run the risk of being too conservative and being outpaced by the inflation bogeyman.

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