What is the recommended ratio of investments between property, stocks and bonds: (and the 100 minus your age rule regarding percentage of Stocks)

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There is

no single "correct" ratio for investing in property, stocks, and bonds, as the ideal allocation depends entirely on your individual age, risk tolerance, financial goals, and time horizon. However, general guidelines and some specific models suggest including real estate as part of a diversified portfolio. 

General Guidelines

• Stocks: Generally considered the growth engine of a portfolio, offering higher long-term return potential but also greater volatility and risk. Younger investors with a longer time horizon can typically allocate a larger percentage to stocks (e.g., using the "110 minus your age" rule for the stock percentage).
• Bonds: Offer stability and income, helping to balance the risk of stocks. They are less volatile but generally offer lower returns over the long term. Investors closer to retirement often increase their bond allocation to preserve capital.
• Property (Real Estate): Can provide a steady source of income, potential long-term appreciation, and a hedge against inflation. It is often considered an "alternative investment" for diversification. 

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Example Allocation Models (with Property)

While traditional models often focus just on stocks and bonds (like the classic 60% stocks / 40% bonds for a moderate investor), some research and financial professionals include specific real estate allocations: 

• University of Florida Research Model: This study suggested that a mix of assets, including property, could offer a better risk/return profile. The "optimal mix" identified was:
  • 50% Property (including personal dwelling and investment property)
  • 30% Stocks
  • 20% Bonds
• Age-Based "Rule of 90" (for Real Estate): One approach suggests a decreasing allocation to real estate as you age and require more liquid assets:
  • Age 30: 60% in real estate, 40% in other assets (stocks/bonds)
  • Age 60 (debt-free): 30% in real estate (no leverage), 50% in bonds, 20% in stocks
• Example from a Financial Advisor: Some models might look like a 50% real estate, 25% stocks, and 25% bonds split, depending on the investor's specific goals. 

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Key Considerations

• Risk Tolerance: Your comfort level with market volatility is a major factor. A highly risk-averse investor may prefer more bonds and less stocks/property.
• Time Horizon: If you need your money sooner, you should generally invest more conservatively in bonds and cash equivalents.
• Diversification: Within each asset class, it's wise to diversify further (e.g., across different types of stocks, different bond types, and various forms of real estate investment). 

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Ultimately, these are rules of thumb. For advice tailored to your personal circumstances, you may consider using an asset allocation calculator or consulting with a qualified financial advisor to develop a personalized strategy. 

• How much of your portfolio should be in real estate?

  Jan 16, 2025 — Another important influencing factor can be said to be opinions offered by leading universities or academic institutio...

  

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