This thumb rule helps investors determine the ratio of debt to equity in their portfolio.
Simply put, it helps you gain the answer that suits you best to the age-long debate of equity vs debt.
According to the '100 minus age' rule, an investor's portfolio should comprise 100 minus their age percentage of their surplus funds in equities and the remainder in debt.
The 100 minus rule works with a simple formula: 100-your age = xx
For a 30 year old investor, the formula becomes '100-age (30) = 70'.
Meaning 70 percent of the investments for such as person should be made in equity and the remaining 30 per cent of investments in debt.