By RICK FERRI
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Age based asset allocation models are very popular. Your??Age in Bonds? and ?Age in Bonds less 10? are frequently discussed in the financial media as a way to? allocate between fixed income and equity.
I have my own version of age-based asset allocation that focuses on a life-cycle pattern rather than an absolute age. Where you are in the cycle is more?relevant to your portfolio?than how old you are.
The four life phases are:
1. Early Savers
2. Mid-life Accumulators
3. Transitional and Early Retirees
4. Mature Retirees
Two people of the same age may be at difference phases, thus need to invest differently. For example, a 55 year old who has three adult children may invest differently than a 55 year old with three teenagers who are preparing to go to college.
I?ve written about these 4 phases at length in my books. For a quick review of the 4 phases, see this recent article titled Life Cycle Investing?posted on?my website at www.RickFerri.com.
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Source: http://blogs.forbes.com/rickferri/2011/05/19/life-cycle-investing/
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