What and When are the time constraints for bonds?

Should I invest more in stocks (vs. bonds) when I am young and decrease it over time?

• This is the commonly used allocation for target date funds for example, but data does not seem to back that this, or doing its opposite (i.e., invest more in bonds and decrease it over time) provides higher returns over time.

• Answer:

  Are you sure data doesn't support this? I've read multiple reports/data analyses that conclude that equities have offered higher returns than debt over long periods of time (like 30 years or more). Just googled to find this - http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histret.html. The reason cited for the higher returns is usually the classical "higher risk, higher return" theory. I think part of the reason is also behavioral ie more irrationality (leading to higher volatility) in stock markets. The only disagreement to your initial statement would be regarding reducing weightage over time. As long as you have enough wealth and are not overly dependent on cashflows from your assets for living expenses (which to a certain extent can be recreated by dividends), I would say higher weightage to stocks for life!