How allocation thinking changes with time

The same portfolio can be defensible for one person and reckless for another, and age is a large part of why. Not because of age itself, but because of what it stands in for: how many years of contributions remain, and how long until the money must be spent.

What age actually proxies for

Two things. First, time to recover — a 40% fall matters less if you have thirty years before you need the money and are still buying every month at lower prices. Second, human capital — your future earnings act somewhat like a stable asset, and early in a career that unspent income is by far the largest thing on your balance sheet.

The common frameworks

The oldest rule of thumb held equity allocation at 100 minus your age. Rising life expectancy led many to revise this upward, to 110 or 120 minus age. Target-date funds encode the same idea as a glide path: heavy in equity early, shifting steadily toward bonds as the target year approaches.

These are starting points, not conclusions. They ignore whether your income is stable or volatile, whether you have dependants, what else you own, and — most importantly — how you personally behave in a crash.

The part the rules leave out

An allocation you abandon in a downturn is worse than a more conservative one you can hold. The investor who moves to 80% equity, panics at a 35% fall, sells, and returns two years later does considerably worse than one who held 60% throughout. Your real risk tolerance is what you did last time markets fell, not what you believe you would do.

How this relates to the simulator

The tool on this site tests a rules-based version of the same instinct — moving money out during a deep fall and back in later. What it found is worth sitting with: across 108 variations, only 11 beat simply continuing to invest every month, and the ones that won did so mostly through three specific episodes across twenty years. That isn't an argument against de-risking. It's an argument that the timing of it is harder than it looks, and that a rule you can follow consistently matters more than the exact thresholds.

Nothing here is investment advice. See the disclaimer.