Simply states that if you take your age and subtract it from 100, the difference is your ideal % of risk that you should have in your portfolio. For example, if you are 70 years old, you would subtract 70 from 100. Ideally you should have no more than 30% of your money at risk. The premise of this rule is that the older you become, the less time you have to make up your losses.

Safe options come with a guarantee of a specified interest rate or growth over a certain period of time and in most cases, are subject to taxes and to probate. To have a few accounts that are "liquid" is always recommended. However, if you have these types of accounts and you are not using the money, why would you want to pay taxes.  If you need to be able to get money today for the sake of an emergency, these are good investments.

When considering a taxable investment vehicle, you must factor into your decision two things: Taxes and Inflation. This will give you an idea how much you are really earning on that money. This is called the real rate of return. The average senior nationwide is taxed in a 25% tax bracket. Inflation is growing and has averaged 3.5%.