first rule of investing investing rule is one of those long-held canons of personal finance. It is typically referred to as a “balanced” allocation and is designed to offer you protection in times of market volatility. You’re essentially using your stake in bonds as a hedge against the ups and downs of the stock market.

That’s because bonds have been historically lower-yielding but less prone to wild swings. They are considered a steady, “safer” investment. Because you invest in bonds — and your holdings increased 1. 40 has served investors well, some experts say it’s in need of an update. What you’re likely to hear from your financial adviser is a call for a more complicated, more sophisticated mix of investments that still keeps to the fundamental principle of long-term growth.

40 rule doesn’t take into account how investors should modify their risk as they age. The rule doesn’t account for an investing market that’s wildly more diverse than when the rule was created more than a half century ago. There’s been some rethinking of the rule because bond performance is more closely related to stock performance than it once was. In other words, when stocks fall, bonds are no longer a safe bet to mute the impact. To be sure, investors who have employed the rule have succeeded. 40 allocation can expect an average annual return of 8.

In the worst year, that allocation resulted in a drop in value of 26. Investing only in bonds would have resulted in an average gain of 5. But researchers noted those were only the averages and results can vary substantially depending on when investors enter and exit the market. Rules of thumb often lull people into a false sense of security,” says certified financial planner Deana Arnett, a senior planning consultant at Rosenthal Wealth Management Group in Manassas, Va. The problem is that they ignore individual factors. Most financial professionals agree that investors need a mix of both stocks and bonds. It’s just a matter of what that mix is.