Phil Cannella – Phillip Cannella News: Phil Cannella examines a fundamental principle of the financial industry which is popularly known as the rule of 100. This is quite a simple rule really, that is based on the premise of how much risk an individual should be invested in and it gives you a good yardstick to follow.
For more than 70 years as Phil Cannella explains, this guideline has been used and followed and has worked time and time again. The way it works is that you take your age and subtract that number from the number 100. The number you then get is the percentage of risk that you should at most be invested in.
Here is an example as Phil Cannella puts it. Let’s say you are 60 years old. You take the number 100 and subtract 60 from it. This gives you 40. Forty percent risk is the most you should be invested in. As another example, let’s say you are 30 years old. Being much younger and in your accumulation phase still, if you run the equation of 100 minus 30 and you get 70. That means you could be invested in 70% of risk in your portfolio.
Phil Cannella explains that this is a very good yardstick to follow when working with clients.