You're listening to Life Kit from NPR.

Hey, it's Mariel.

Okay, I'm going to do things a little differently today.

I'm going to jump right into one of our tips for diversifying your investments.

It's a formula called the Rule of 120.

The very simple calculation that folks can use is just take

120 minus your age. 120 minus your age. And that should be your stock allocation. By the way, this is

Amanda Holden, founder of a financial literacy business called Invested Development, an author of

How to Be a Rich Old

Lady. When she says stock allocation, she's talking about stocks versus bonds. If that means

nothing to you, sit tight. We got you. Anyway, the rule of 120. Let's say you're 30, so minus 30,

leaves 90% stocks, 10% bonds.

120 minus 30 leaves you with 90% stocks.

And basically this breaks down to more stocks when you're young, fewer stocks as you get

older.

That is just a starting point.

But it is a really simple way to think about diversification, which basically just means

don't put all your eggs in one basket. Sidebar, I was trying to find the origin of that phrase.

Seems like it goes back to some translations of the Spanish novel Don Quixote, except Miguel

Cervantes didn't actually use the words eggs or basket. Regardless, for an old proverb,

it makes a lot of sense. If you drop the basket and all of your eggs are in it, you could break all of your eggs at once. The same wisdom

applies to investing. If you have money in the markets in a retirement plan or in a brokerage

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