"100 minus your age in equity" is the classic rule. At 30 to 70% equity. At 60 to 40%. It is a fine default, but it ignores: your income stability, your existing asset base, your spouse's risk profile, whether you need the money in 5 years or 30, and the fact that medians lie. The rule is a starting point, not a prescription. And for aggressive young earners, "110 minus age" is closer to right.
By the end, you will know the glide-path rule, the three personal factors that should adjust it, and the rebalancing frequency that keeps it on track without tax friction.
The starting rule and its limits
The "100-minus-age" (or the more aggressive "110-minus-age" for those with stable income and long horizons) gives you an equity allocation percentage. At 25 to 75-85% equity. At 50 to 50-60%. The logic: younger investors can ride crashes through decades; older investors cannot. The math works well for median scenarios but fails at edges. A 30-year-old government employee with guaranteed pension has different risk capacity than a 30-year-old freelancer with uncertain income.
Most modern Indian personal-finance literature defaults to "100-minus-age" because it is simple, memorable, and Approximately Right. For a 35-year-old salaried with 25-year horizon, 65-75% equity is reasonable. Don't overthink the single-percentage-point precision; the direction is right.
Three factors that should adjust
- INCOME STABILITY. Government employee vs freelancer: 10-15 pp adjustment. Stable-income earners can handle more equity (risk capacity is higher); volatile-income earners need more debt for cash-flow smoothing.
- EXISTING ASSETS. If real estate is already 40% of net worth, reduce further real-estate/debt allocation. The household is already exposed to interest rate and property cycles; adding more debt exposure concentrates.
- GOAL HORIZON. A goal 3 years away needs short-term debt regardless of age. A 28-year-old saving for a house down payment in 3 years should have THAT money in debt, even if the rest of the portfolio is 75% equity.
Glide path over time
Annual automatic adjustment: each year, reduce equity by 1 percentage point, increase debt. At 30 (70% equity) to at 40 (60%) to at 50 (50%) to at 60 (40%). This continues through retirement. The mechanism: every April, rebalance the portfolio to match the new target allocation. Sell some equity (if run up), buy debt. Or redirect new SIPs to debt until the allocation catches up.
Alternative: target-date funds (TDFs). Mutual funds that auto-adjust the equity-debt mix over time to a specific retirement year. Available in India but limited options (Mirae Asset TDFs, DSP Target-Date). Convenience vs control trade-off: TDF does the rebalancing for you; DIY lets you customise. For most, DIY with annual rebalancing is enough.
Rebalance yearly, not monthly
Monthly rebalancing triggers taxes and friction. Annual rebalancing (e.g., first week of April) keeps the allocation within 5 percentage points of target with minimal cost. Rebalance via redirected SIPs first (tax-free), then by selling if needed (capital-gains friction).
Rebalance yearly, not monthly
Monthly rebalancing triggers tax and friction. Annual review keeps allocation within 5pp drift at minimal cost. Use redirected SIPs first (free) before selling (capital-gains event).
Life events reset the plan
Marriage, child, house purchase, inheritance, job loss. Each is an allocation-reset trigger. Goal sets change, income stability changes, horizon changes. Re-evaluate allocation, don't just continue with the prior plan.
Dual-earner households. Risk capacity expands
Two incomes mean income-loss risk is diversified. Each spouse's income loss is partially offset by the other earning. Couples can afford 10-15pp more equity than a single-earner household of the same age.
Key Takeaways
- "100-minus-age" is a starting default, not a prescription. 110-minus-age for aggressive young earners.
- Adjust for income stability, existing assets, goal horizon.
- Rebalance once a year; tolerate 5pp drift the rest of the time.
- Goal 3 years away to short-term debt regardless of age.
- Review target every major life event (marriage, kid, house, job change).
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