When Josh started his new job last year, he immediately signed up to contribute to his company’s 401(k) plan. He brought home all the paper work one night and started going through it to understand what decisions needed to be made. He had planned to select a “target date” fund, one that automatically balances your portfolio based on the year you want to retire. However, once he started reading the documents, he realized—uh oh—there weren’t any target date funds in his company’s plan!

In this case, he was going to have to balance his portfolio himself. That meant looking at the different mutual funds available within the plan and allocating his money, by percentages, to certain ones. He knew he should have more stocks than bonds because he’s young. Stocks are more aggressive, and are the better option when you have a long time before retirement. That means you’ll have the maximum opportunity to get the biggest returns, and if the market takes a downturn at some point, you’ll still have time to recover.

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The general rule of thumb is to subtract your age from one hundred. The resulting number is the percent that you should invest in stocks vs. bonds. That means that a 25-year-old should have roughly 75% of their retirement money in equity (or stock) funds and 25% in bond funds. Josh went with this rule, more or less, and allocated his money accordingly.

Then the end of the year came, along with the quarterly report on his investment returns. When he looked it over, he saw that he now had a portfolio with 83% in equity funds and 17% in bonds. What gives? Well, assets get reallocated over time due to a number of issues, which is why you need to make sure you pay attention to these reports. You’ll need to rebalance your portfolio over time. Either to get back on track with your current allocation (75/25 in this case) or to change it as you age (to 70/30, say, by the time you’re 30).