5 Things to Know About Asset Allocation

When it comes to planning for retirement, know how to achieve your investment goals.

By Matthew Frankel, CFP – Updated Dec 2, 2025 at 2:45 PM

Key Points

Adjust asset allocation with age to manage risk as retirement nears.
Use the Rule of 110 to guide stock investment percentage by age.
Invest in diversified asset classes and holdings to stabilize returns.

Asset allocation refers to the diversification of your retirement account across various asset classes, including stocks, bonds, and cash.

Your age is a primary consideration when you're managing allocation. The idea is that the older you are, the less investment risk you can afford to take. As you get closer to retirement age, your risk tolerance decreases dramatically, and you can't afford any wild swings in the stock market.

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A graphic explaining asset allocation: The diversification of your retirement account across stocks, bonds and cash. — Image source: The Motley Fool.

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Asset

An asset is a resource used to hold or create economic value.

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Rule of 110 for Asset Allocations

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Keep in mind that this rule aims to determine your ideal asset allocation solely by your age. However, every person is different. You can adjust the percentages higher or lower to compensate for your own risk tolerance, your desired retirement age, and other factors. can be just as important. Ultimately, the way you allocate your investment portfolio should provide you with peace of mind, regardless of your age.

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About the Author

Matt Frankel, CFP, is a contributing Motley Fool stock market analyst and personal finance expert covering financial stocks, REITs, SPACs, and personal finance. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, The National Desk, and other TV networks and publications for his financial, stock market, and investing expertise.

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