Your age is an important factor while considering to invest in high risk assets like equity. To understand this, let us understand the 100 minus your age rule.
This mantra says your age should be deducted from 100 and the resultant number is the maximum exposure you should have in equity related options.
For e.g. if your total investment today is 10 lakhs and you are 30 years of age, 70 % (100 – 30) of 10 lakhs you should invest in equity related options like stocks, mutual funds, ulips etc. The remaining 30% should be in debt investments like FD, bonds etc. With passing of age this allocation will keep changing. For e.g. someone who is 50 years old should have a 50-50 allocation towards equity and debt.
Such an approach will ensure that as you are growing old, you are investing more in safer instruments, which will in turn safeguard your returns.