Alternative Investments

Two investment approaches: Which is better for you?

Brian Loy

What are your favorite financial rules of thumb? Spend less than you make? Save 10% of your earnings? Have three months’ equivalent of living expenses stored away in savings? Keep your housing costs within a third of your income? Use the “debt snowball” method to be debt-free? Gift or bequest enough to your children so they can do anything but not too much that they can do nothing? This article focuses on two financial rules of thumb about allocation for you to consider as you rebalance your investment accounts– the more popular “Own Your Age in Bonds” (OYIAB) method and the lesser-known 15/50 Rule.

The role of asset allocation

The new year often means a fresh look at your investment allocation of retirement and 401(k) accounts. It involves balancing risk and return by investing across different asset classes — including stocks, bonds and cash — or, more simply, “slicing the pie.” Traditional strategies seek to prepare for shifts in the economy and combine asset classes that have low correlations to each other. That way, they’re not all moving up or down at the same time, offering a smoother ride.


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